AB 759, as amended, Linder. Recreational vehicles.
(1) Existing law establishes a New Motor Vehicle Board that regulates the activities or practices of a new motor vehicle dealer, manufacturer, manufacturer branch, distributor, distributor branch, or representative, as specified. Existing law regulates the terms and enforcement of recreational vehicle franchise agreements. Existing law requires a franchisor seeking to enter into a franchise establishing an additional motor vehicle dealership within a relevant market area where the same recreational vehicle line-make is represented, or seeking to relocate an existing motor vehicle dealership, to notify the board of that intention. Existing law allows franchisees in that recreational vehicle line-make in the relevant market area to file with the board a protest to establishing or relocating the dealership.
This bill would revise these provisions and would clarify that the above provisions apply to a franchisor seeking to enter into a franchise establishing an additional recreational vehicle dealership, or seeking to relocate an existing recreational vehicle dealership, that has a relevant market area within which the same recreation vehicle line-make is represented.
(2) Existing law generally requires a manufacturer, manufacturer branch, remanufacturer, remanufacturer branch, distributor, distributor branch, transporter, or dealer of vehicles to be licensed by the Department of Motor Vehicles. Existing law allows the department to suspend or revoke a license issued to a dealer upon determining that the person to whom the license was issued has willfully violated specified requirements imposed on new motor vehicle franchisors relating to providing specified information and compensation to franchisees.
This bill would make the above provisions applicable to a recreational vehicle franchisor.
(3) Existing law makes it a violation, punishable as an infraction, for the holder of a dealer’s license to, among other things, advertise or sell a new vehicle of a line-make for which the dealer does not hold a franchise. Under existing law, this prohibition does not apply to a recreational vehicle, as defined.
This bill would make the above prohibitions applicable to recreational vehicles. By increasing the scope of a crime, this bill would impose a state-mandated local program.
(4) Existing law makes it a violation, punishable as an infraction, for a licensed manufacturer or distributor to modify, replace, enter into, relocate, terminate, or refuse to renew a franchise in violation of specified provisions of law.
This bill would make this prohibition subject to additional provisions of law relating to recreational vehicle manufacturers and distributors. By expanding the scope of a crime, this bill would impose a state-mandated local program.
(5) Existing law prohibits a recreational vehicle manufacturer or distributor from selling a new recreational vehicle through a recreational vehicle dealer without having first entered into a written recreational vehicle franchise.
This bill would, following the termination, cancellation, or non-renewal of a recreational vehicle franchise, allow the sale of any new recreational vehicle inventory that was purchased by the recreational vehicle dealer, or shipped by a manufacturer or distributor, during the period that the written recreational vehicle franchise was in effect.
(6) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
Section 3010 of the Vehicle Code is amended to
Five members of the board shall constitute a quorum for
4the transaction of business, for the performance of any duty or the
5exercise of any power or authority of the board, except that three
6members of the board, who are not new motor vehicle dealers,
7shall constitute a quorum for the purposes of Article 4
8(commencing with Section 3060) and Article 5 (commencing with
9Section 3070) and the consideration of a petition pursuant to
10subdivision (c) of Section 3050 that involves a dispute between a
11franchisee and franchisor.
Section 3066 of the Vehicle Code is amended to read:
(a) Upon receiving a protest pursuant to Section 3060,
143062, 3064, 3065, or 3065.1, the board shall fix a time within 60
15days of the order, and place of hearing, and shall send by certified
16mail a copy of the order to the franchisor, the protesting franchisee,
17and all individuals and groups that have requested notification by
18the board of protests and decisions of the board. Except in a case
19involving a franchisee who deals exclusively in motorcycles, the
20board or its executive director may, upon a showing of good cause,
21accelerate or postpone the date initially established for a hearing,
22but the hearing shall not be rescheduled more than 90 days after
23the board’s initial order. For the purpose of accelerating or
24postponing a hearing date, “good cause” includes, but is not limited
25to, the effects upon, and any irreparable harm to, the parties or
26interested persons or groups if the request for a change in hearing
27date is not granted. The board or an administrative law judge
28designated by the board shall hear and consider the oral and
29documented evidence introduced by the parties and other interested
30individuals and groups, and the board shall make its decision solely
P4 1on the record so made. Chapter 4.5 (commencing with Section
211400) of Part 1 of Division 3 of Title 2 of the Government Code
3and Sections 11507.3, 11507.6, 11507.7, 11511, 11511.5, 11513,
411514, 11515, and 11517 of the Government Code apply to these
6(b) In a hearing on a protest filed pursuant to Section 3060 or
73062 the franchisor shall have the burden of proof to establish that
8there is good cause to modify, replace, terminate, or refuse to
9continue a franchise. The franchisee shall have the burden of proof
10to establish that there is good cause not to enter into a franchise
11establishing an additional motor vehicle dealership or relocating
12an existing motor vehicle dealership.
13(c) Except as otherwise provided in this chapter, in a hearing
14on a protest alleging a violation of, or filed pursuant to, Section
153064, 3065 or 3065.1, the franchisee shall have the burden of proof,
16but the franchisor has the burden of proof to establish that a
17franchisee acted with intent to defraud the franchisor when that
18issue is material to a protest filed pursuant to Section 3065 or
20(d) A member of the board who is a new motor vehicle dealer
21may not participate in, hear, comment, or advise other members
22upon, or decide, a matter involving a protest filed pursuant to this
23article unless all parties to the protest stipulate otherwise.
Section 3067 of the Vehicle Code is amended to read:
(a) The decision of the board shall be in writing and
26shall contain findings of fact and a determination of the issues
27presented. The decision shall sustain, conditionally sustain,
28overrule, or conditionally overrule the protest. Conditions imposed
29by the board shall be for the purpose of assuring performance of
30binding contractual agreements between franchisees and franchisors
31or otherwise serving the purposes of this article. If the board fails
32to act within 30 days after the hearing, within 30 days after the
33board receives a proposed decision when the case is heard before
34an administrative law judge alone, or within a period necessitated
35by Section 11517 of the Government Code, or as may be mutually
36agreed upon by the parties, then the proposed action shall be
37deemed to be approved. Copies of the board’s decision shall be
38delivered to the parties personally or sent to them by certified mail,
39as well as to all individuals and groups that have requested
40notification by the board of protests and decisions by the board.
P5 1The board’s decision shall be final upon its delivery or mailing
2and a reconsideration or rehearing is not permitted.
3(b) Notwithstanding subdivision (c) of Section 11517 of the
4Government Code, if a protest is heard by an administrative law
5judge alone, 10 days after receipt by the board of the administrative
6law judge’s proposed decision, a copy of the proposed decision
7shall be filed by the board as a public record and a copy shall be
8served by the board on each party and his or her attorney.
Section 3068 of the Vehicle Code is amended to read:
Either party may seek judicial review of final decisions
11of the board. Time for filing for the review shall not be more than
1245 days from the date on which the final order of the board is made
13public and is delivered to the parties personally or is sent to them
14by certified mail.
Section 3072 of the Vehicle Code is amended to read:
(a) (1) Except as otherwise provided in subdivision (b),
17if a franchisor seeks to enter into a franchise establishing an
18additional recreational vehicle dealership, or seeks to relocate an
19existing recreational vehicle dealership, that has a relevant market
20area in which the same recreational vehicle line-make is
21represented, the franchisor shall, in writing, first notify the board
22and each franchisee in that recreational vehicle line-make in the
23relevant market area of the franchisor’s intention to establish an
24additional dealership or to relocate an existing dealership. Within
2520 days of receiving the notice, satisfying the requirements of this
26section, or within 20 days after the end of any appeal procedure
27provided by the franchisor, any franchisee required to be given
28the notice may file with the board a protest to the proposed
29dealership establishment or relocation described in the franchisor’s
30notice. If, within this time, a franchisee files with the board a
31request for additional time to file a protest, the board or its
32executive director, upon a showing of good cause, may grant an
33additional 10 days to file the protest. When a protest is filed, the
34board shall inform the franchisor that a timely protest has been
35filed, that a hearing is required pursuant to Section 3080, and that
36the franchisor shall not establish the proposed dealership or relocate
37the existing dealership until the board has held a hearing as
38provided in Section 3080, nor thereafter, if the board has
39determined that there is good cause for not permitting the
40establishment of the proposed recreational vehicle dealership or
P6 1relocation of the existing recreational vehicle dealership. In the
2event of multiple protests, hearings may be consolidated to expedite
3the disposition of the issue.
4(2) The written notice shall contain, on the first page thereof in
5at least 12-point bold type and circumscribed by a line to segregate
6it from the rest of the text, the following statement:
7“NOTICE TO DEALER: You have the right to file a protest
8with the NEW MOTOR VEHICLE BOARD in Sacramento and
9have a hearing on your protest under the terms of the California
10Vehicle Code if you oppose this action. You must file your protest
11with the board within 20 days of your receipt of this notice, or
12within 20 days after the end of any appeal procedure that is
13provided by us to you. If, within this time, you file with the board
14a request for additional time to file a protest, the board or its
15executive director, upon a showing of good cause, may grant you
16an additional 10 days to file the protest.”
17(b) Subdivision (a) does not apply to any of the following:
18(1) The relocation of an existing dealership to any location that
19is both within the same city as, and within one mile of, the existing
21(2) The establishment at any location that is both within the
22same city as, and within one-quarter mile of, the location of a
23dealership of the same recreational vehicle line-make that has been
24out of operation for less than 90 days.
25(3) A display of vehicles at a fair, exposition, or similar exhibit
26if no actual sales are made at the event and the display does not
27exceed 30 days. This paragraph may not be construed to prohibit
28a new vehicle dealer from establishing a branch office for the
29purpose of selling vehicles at the fair, exposition, or similar exhibit,
30even though that event is sponsored by a financial institution, as
31defined in Section 31041 of the Financial Code, or by a financial
32institution and a licensed dealer. The establishment of these branch
33offices, however, shall be in accordance with subdivision (a) where
35(4) An annual show sponsored by a national trade association
36of recreational vehicle manufacturers that complies with all of the
37requirements of subdivision (d) of Section 11713.15.
38(c) For the purposes of this section, the reopening of a dealership
39that has not been in operation for one year or more shall be deemed
40the establishment of an additional recreational vehicle dealership.
P7 1(d) For the purposes of this section and Section 3073, a
2“recreational vehicle dealership” or “dealership” is any authorized
3facility at which a franchisee offers for sale or lease, displays for
4sale or lease, or sells or leases new recreational vehicles, as defined
5in subdivision (a) of Section 18010 of the Health and Safety Code.
6A “recreational vehicle dealership” or “dealership” does not include
7a dealer who deals exclusively in truck campers.
Section 3072.5 of the Vehicle Code is amended to
For the purposes of this article, a “recreational vehicle
11line-make” is a group or groups of recreational vehicles defined
12by the terms of a written agreement that complies with Section
Section 3073 of the Vehicle Code is amended to read:
In determining whether good cause has been established
16for not entering into a recreational vehicle franchise or relocating
17an existing dealership of the same recreational vehicle line-make,
18the board shall take into consideration the existing circumstances,
19including, but not limited to, all of the following:
20(a) The permanency of the investment.
21(b) The effect on the retail recreational vehicle business and the
22consuming public in the relevant market area.
23(c) Whether it is injurious to the public welfare for an additional
24recreational vehicle franchise to be established or an existing
25dealership be relocated.
26(d) Whether the franchisees of the same recreational vehicle
27line-make in the relevant market area are providing adequate
28competition and convenient consumer care for the motor vehicles
29of the recreational vehicle line-make in the market area. In making
30this determination, the board shall consider the adequacy of
31recreational vehicle sales and, if required by the franchise, service
32facilities, equipment, supply of vehicle parts, and qualified service
34(e) Whether the establishment of an additional franchise would
35increase competition and therefore be in the public interest.
Section 3074 of the Vehicle Code is amended to read:
(a) A franchisor shall specify to its franchisees the
38delivery and preparation obligations of the franchisees prior to
39delivery of new recreational vehicles to retail buyers. A copy of
40the delivery and preparation obligations, which shall constitute
P8 1the franchisee’s only responsibility for product liability between
2the franchisee and the franchisor but which shall not in any way
3affect the franchisee’s responsibility for product liability between
4the purchaser and either the franchisee or the franchisor, and a
5schedule of compensation to be paid franchisees for the work and
6services they shall be required to perform in connection with the
7delivery and preparation obligations shall be filed with the board
8by franchisors, and shall constitute the compensation as set forth
9on the schedule. The schedule of compensation shall be reasonable,
10with the reasonableness thereof being subject to the approval of
11the board, if a franchisee files a notice of protest with the board.
12In determining the reasonableness of the schedules, the board shall
13consider all relevant circumstances, including, but not limited to,
14the time required to perform each function that the dealer is
15obligated to perform and the appropriate labor rate.
16(b) Upon delivery of the vehicle, the franchisee shall give a
17copy of the delivery and preparation obligations to the purchaser
18and a written certification that the franchisee has fulfilled these
Section 3078 of the Vehicle Code is amended to read:
(a) If the board receives a complaint from a member of
22the public seeking a refund involving the sale or lease of, or a
23replacement of, a recreational vehicle, as defined in subdivision
24(a) of Section 18010 of the Health and Safety Code, from a
25recreational vehicle dealership, as defined in subdivision (d) of
26Section 3072, the board shall recommend that the complainant
27consult with the Department of Consumer Affairs.
28(b) This chapter does not affect a person’s rights regarding a
29transaction involving a recreational vehicle as defined in
30subdivision (a), to maintain an action under any other statute,
31including, but not limited to, applicable provisions of Title 1.7
32(commencing with Section 1790) of Part 4 of Division 3 of the
Section 3079 of the Vehicle Code is amended to read:
This article applies only to a recreational vehicle
36franchise entered into or renewed on or after January 1, 2004.
Section 3080 is added to the Vehicle Code, to read:
(a) Upon receiving a protest pursuant to Section 3070,
393072, 3074, 3075, or 3076, the board shall fix a time and place of
40hearing within 60 days of the order, and shall send by certified
P9 1mail a copy of the order to the franchisor, the protesting franchisee,
2and all individuals and groups that have requested notification by
3the board of protests and decisions of the board. The board or its
4executive director may, upon a showing of good cause, accelerate
5or postpone the date initially established for a hearing, but the
6hearing shall not be rescheduled more than 90 days after the board’s
7initial order. For the purpose of accelerating or postponing a
8hearing date, “good cause” includes, but is not limited to, the
9effects upon, and any irreparable harm to, the parties or interested
10persons or groups if the request for a change in hearing date is not
11granted. The board or an administrative law judge designated by
12the board shall hear and consider the oral and documented evidence
13introduced by the parties and other interested individuals and
14groups, and the board shall make its decision solely on the record
15so made. Chapter 4.5 (commencing with Section 11400) of Part
161 of Division 3 of Title 2 of the Government Code and Sections
1711507.3, 11507.6, 11507.7, 11511, 11511.5, 11513, 11514, 11515,
18and 11517 of the Government Code apply to these proceedings.
19(b) In a hearing on a protest filed pursuant to Section 3070 or
203072, the franchisor shall have the burden of proof to establish
21that there is good cause to modify, replace, terminate, or refuse to
22continue a franchise. The franchisee shall have the burden of proof
23to establish that there is good cause not to enter into a franchise
24establishing an additional recreational vehicle dealership or
25relocating an existing recreational vehicle dealership.
26(c) Except as otherwise provided in this chapter, in a hearing
27on a protest alleging a violation of, or filed pursuant to, Section
283074, 3075, or 3076, the franchisee shall have the burden of proof,
29but the franchisor has the burden of proof to establish that a
30franchisee acted with intent to defraud the franchisor when that
31issue is material to a protest filed pursuant to Section 3075 or 3076.
32(d) A member of the board who is a new motor vehicle dealer
33or recreational vehicle dealer may not participate in, hear,
34comment, or advise other members upon, or decide, a matter
35involving a protest filed pursuant to this article unless all parties
36to the protest stipulate otherwise.
Section 3081 is added to the Vehicle Code, to read:
(a) The decision of the board shall be in writing and
39shall contain findings of fact and a determination of the issues
40presented. The decision shall sustain, conditionally sustain,
P10 1overrule, or conditionally overrule the protest. Conditions imposed
2by the board shall be for the purpose of assuring performance of
3binding contractual agreements between franchisees and franchisors
4or otherwise serving the purposes of this article. If the board fails
5to act within 30 days after the hearing, within 30 days after the
6board receives a proposed decision when the case is heard before
7an administrative law judge alone, or within a period necessitated
8by Section 11517 of the Government Code, or as may be mutually
9agreed upon by the parties, then the proposed action shall be
10deemed to be approved. Copies of the board’s decision shall be
11delivered to the parties personally or sent to them by certified mail,
12as well as to all individuals and groups that have requested
13notification by the board of protests and decisions by the board.
14The board’s decision shall be final upon its delivery or mailing
15and a reconsideration or rehearing is not permitted.
16(b) Notwithstanding subdivision (c) of Section 11517 of the
17Government Code, if a protest is heard by an administrative law
18judge alone, 10 days after receipt by the board of the administrative
19law judge’s proposed decision, a copy of the proposed decision
20shall be filed by the board as a public record and a copy shall be
21served by the board on each party and his or her attorney.
Section 3082 is added to the Vehicle Code, to read:
Either party may seek judicial review of final decisions
24of the board. Time for filing for the review shall not be more than
2545 days from the date on which the final order of the board is made
26public and is delivered to the parties personally or is sent to them
27by certified mail.
Section 11705 of the Vehicle Code is amended to
(a) The department, after notice and hearing, may
31suspend or revoke the license issued to a dealer, transporter,
32manufacturer, manufacturer branch, remanufacturer,
33remanufacturer branch, distributor, or distributor branch upon
34determining that the person to whom the license was issued is not
35lawfully entitled thereto, or has done any of the following:
36(1) Filed an application for the license using a false or fictitious
37name not registered with the proper authorities, or knowingly made
38a false statement or knowingly concealed a material fact, in the
39application for the license.
P11 1(2) Made, or knowingly or negligently permitted,
an illegal use
2of the special plates issued to the licensee.
3(3) Used a false or fictitious name, knowingly made a false
4statement, or knowingly concealed a material fact, in an application
5for the registration of a vehicle, or otherwise committed a fraud
6in the application.
7(4) Failed to deliver to a transferee lawfully entitled thereto a
8properly endorsed certificate of ownership.
9(5) Knowingly purchased, sold, or otherwise acquired or
10disposed of a stolen motor vehicle.
11(6) Failed to provide and maintain a clear physical division
12between the type of business licensed pursuant to this chapter and
13any other type of business conducted at the established place of
15(7) Willfully violated Section 3064, 3065, 3074, or 3075 or any
16rule or regulation adopted pursuant thereto.
17(8) Violated any provision of Division 3 (commencing with
18Section 4000) or any rule or regulation adopted pursuant thereto,
19or subdivision (a) of Section 38200.
20(9) Violated any provision of Division 4 (commencing with
21Section 10500) or any rule or regulation adopted pursuant thereto.
22(10) Violated any provision of Article 1 (commencing with
23Section 11700) of Chapter 4 of Division 5 or any rule or regulation
24adopted pursuant thereto.
25(11) Violated any provision of Part 5
(commencing with Section
2610701) of Division 2 of the Revenue and Taxation Code or any
27rule or regulation adopted pursuant thereto.
28(12) Violated any provision of Chapter 2b (commencing with
29Section 2981) of Title 14 of Part 4 of Division 3 of the Civil Code
30or any rule or regulation adopted pursuant thereto.
31(13) Submitted a check, draft, or money order to the department
32for any obligation or fee due the state which was dishonored or
33refused payment upon presentation.
34(14) Has caused any person to suffer any loss or damage by
35reason of any fraud or deceit practiced on that person or fraudulent
36representations made to that person in the course of the licensed
purposes of this paragraph, “fraud” includes any act or
39omission which is included within the definition of either “actual
40fraud” or “constructive fraud” as defined in Sections 1572 and
P12 11573 of the Civil Code, and “deceit” has the same meaning as
2defined in Section 1710 of the Civil Code. In addition, “fraud”
3and “deceit” include, but are not limited to, a misrepresentation in
4any manner, whether intentionally false or due to gross negligence,
5of a material fact; a promise or representation not made honestly
6and in good faith; an intentional failure to disclose a material fact;
7and any act within Section 484 of the Penal Code.
8For purposes of this paragraph, “person” also includes a
10(15) Failed to meet the terms and conditions of an agreement
11entered into pursuant to Section 11707.
12(16) Violated Section 43151, 43152, or 43153 of, or subdivision
13(b) of Section 44072.10 of, the Health and Safety Code.
14(17) Failed to repay a claim paid by the Consumer Motor
15Vehicle Recovery Corporation as provided in subdivision (i) of
17(18) As a buy-here-pay-here dealer, violated any provision of
18Chapter 11 (commencing with Section 7500) of Divisions 3 of the
19Business and Professions Code or any rule or regulation adopted
20pursuant to those provisions.
21(b) Any of the causes specified in this chapter as a cause for
22refusal to issue a license to a transporter, manufacturer,
23manufacturer branch, remanufacturer, remanufacturer branch,
24distributor, distributor branch, or dealer applicant is cause to
25suspend or revoke a license issued to a transporter, manufacturer,
26manufacturer branch, remanufacturer, remanufacturer branch,
27distributor, distributor branch, or dealer.
28(c) Except as provided in Section 11707, every hearing provided
29for in this section shall be conducted pursuant to Chapter 5
30(commencing with Section 11500) of Part 1 of Division 3 of Title
312 of the Government Code.
Section 11713.1 of the Vehicle Code is amended to
It is a violation of this code for the holder of a dealer’s
35license issued under this article to do any of the following:
36(a) Advertise a specific vehicle for sale without identifying the
37vehicle by its model, model-year, and either its license number or
38that portion of the vehicle identification number that distinguishes
39the vehicle from all other vehicles of the same make, model, and
40model-year. Model-year is not required to be advertised for current
P13 1model-year vehicles. Year models are no longer current when
2ensuing year models are available for purchase at retail in
3California. An advertisement that offers for sale a class of new
4vehicles in a dealer’s inventory, consisting of five or more vehicles,
5that are all of the same make, model, and model-year is not required
6to include in the advertisement the vehicle identification numbers
7or license numbers of those vehicles.
8(b) Advertise the total price of a vehicle without including all
9costs to the purchaser at time of sale, except taxes, vehicle
10registration fees, the California tire fee, as defined in Section 42885
11of the Public Resources Code, emission testing charges not
12exceeding fifty dollars ($50), actual fees charged for certificates
13pursuant to Section 44060 of the Health and Safety Code, finance
14charges, and any dealer document processing charge or charge to
15electronically register or transfer the vehicle.
16(c) (1) Exclude from an advertisement of a vehicle for sale that
17there will be added to the advertised total price at the time of sale,
18charges for sales tax, vehicle registration fees, the California tire
19fee, the fee charged by the state for the issuance of a certificate of
20 compliance or noncompliance pursuant to a statute, finance
21charges, a charge to electronically register or transfer the vehicle,
22and a dealer document processing charge.
23(2) The obligations imposed by paragraph (1) are satisfied by
24adding to the advertisement a statement containing no abbreviations
25and that is worded in substantially the following form: “Plus
26government fees and taxes, any finance charges, any dealer
27document processing charge, any electronic filing charge, and any
28emission testing charge.”
29(3) For purposes of paragraph (1), “advertisement” means an
30advertisement in a newspaper, magazine, or direct mail publication
31that is two or more columns in width or one column in width and
32more than seven inches in length, or on a Web page of a dealer’s
33Internet Web site that displays the price of a vehicle offered for
34sale on the Internet, as that term is defined in paragraph (6) of
35subdivision (f) of Section 17538 of the Business and Professions
37(d) Represent the dealer document processing charge, electronic
38registration or transfer charge, or emission testing charge, as a
P14 1(e) Fail to sell a vehicle to a person at the advertised total price,
2exclusive of taxes, vehicle registration fees, the California tire fee,
3the fee charged by the state for the issuance of a certificate of
4compliance or noncompliance pursuant to a statute, finance
5charges, mobilehome escrow fees, the amount of a city, county,
6or city and county imposed fee or tax for a mobilehome, a dealer
7document processing charge, an electronic registration or transfer
8charge, and a charge for emission testing not to exceed fifty dollars
9($50) plus the actual fees charged for certificates pursuant to
10Section 44060 of the Health and Safety Code, while the vehicle
11remains unsold, unless the advertisement states the advertised total
12price is good only for a specified time and the time has elapsed.
13Advertised vehicles shall be sold at or below the advertised total
14price, with statutorily permitted exclusions, regardless of whether
15the purchaser has knowledge of the advertised total price.
16(f) (1) Advertise for sale, sell, or purchase for resale a new
17vehicle of a line-make for which the dealer does not hold a
19(2) This subdivision does not apply to a transaction involving
21(A) A mobilehome.
22(B) A commercial coach, as defined in Section 18001.8 of the
23Health and Safety Code.
24(C) An off-highway motor vehicle subject to identification as
25defined in Section 38012.
26(D) A manufactured home.
27(E) A new vehicle that will be substantially altered or modified
28by a converter prior to resale.
29(F) A commercial vehicle with a gross vehicle weight rating of
30more than 10,000 pounds.
31(G) A vehicle purchased for export and exported outside the
32territorial limits of the United States without being registered with
34(H) A vehicle acquired in the ordinary course of business as a
35new vehicle by a dealer franchised to sell that vehicle, if all of the
37(i) The manufacturer or distributor of the vehicle files a
39(ii) The franchise agreement of the dealer is terminated,
40canceled, or rejected by the manufacturer or distributor as part of
P15 1the bankruptcy proceedings and the termination, cancellation, or
2rejection is not a result of the revocation by the department of the
3dealer’s license or the dealer’s conviction of a crime.
4(iii) The vehicle is held in the inventory of
the dealer on the
5date the bankruptcy petition is filed.
6(iv) The vehicle is sold by the dealer within six months of the
7date the bankruptcy petition is filed.
8(3) Subparagraph (H) of paragraph (2) does not entitle a dealer
9whose franchise agreement has been terminated, canceled, or
10rejected to continue to perform warranty service repairs or continue
11to be eligible to offer or receive consumer or dealer incentives
12offered by the manufacturer or distributor.
13(g) Sell a park trailer, as specified in Section 18009.3 of the
14Health and Safety Code, without disclosing in writing to the
15purchaser that a park trailer is required to be moved by a transporter
16or a licensed manufacturer or dealer under a permit issued by the
17Department of Transportation or a local authority with respect to
18highways under their respective jurisdictions.
19(h) Advertise free merchandise, gifts, or services provided by
20a dealer contingent on the purchase of a vehicle. “Free” includes
21merchandise or services offered for sale at a price less than the
22seller’s cost of the merchandise or services.
23(i) (1) Advertise vehicles, and related goods or services, at a
24specified dealer price, with the intent not to supply reasonably
25expectable demand, unless the advertisement discloses the number
26of vehicles in stock at the advertised price. In addition, whether
27or not there are sufficient vehicles in stock to supply a reasonably
28expectable demand, when phrases such as “starting at,” “from,”
29“beginning as low as,” or words of similar import are used in
30reference to an advertised price, the advertisement shall disclose
31the number of vehicles available at that advertised price.
32(2) For purposes of this subdivision, in a newspaper
33advertisement for a vehicle that is two model-years old or newer,
34the actual phrase that states the number of vehicles in stock at the
35advertised price shall be printed in a type size that is at least equal
36to one-quarter of the type size, and in the same style and color of
37type, used for the advertised price. However, in no case shall the
38phrase be printed in less than 8-point type size, and the phrase
39shall be disclosed immediately above, below, or beside the
P16 1advertised price without intervening words, pictures, marks, or
3(3) The disclosure required by this
subdivision is in addition to
4any other disclosure required by this code or any regulation
5regarding identifying vehicles advertised for sale.
6(j) Use “rebate” or similar words, including, but not limited to,
7“cash back,” in advertising the sale of a vehicle unless the rebate
8is expressed in a specific dollar amount and is in fact a rebate
9offered by the vehicle manufacturer or distributor, a finance
10company affiliated with a vehicle manufacturer or distributor, a
11regulated utility, or a governmental entity directly to the retail
12purchaser of the vehicle or to the assignee of the retail purchaser.
13(k) Require a person to pay a higher price for a vehicle and
14related goods or services for receiving advertised credit terms than
15the cash price the same person would have to pay to purchase the
16same vehicle and related goods or services. For the purpose of this
17subdivision, “cash price” has the same meaning as defined in
18subdivision (e) of Section 2981 of the Civil Code.
19(l) Advertise a guaranteed trade-in allowance.
20(m) Misrepresent the authority of a salesperson, representative,
21or agent to negotiate the final terms of a transaction.
22(n) (1) Use “invoice,” “dealer’s invoice,” “wholesale price,”
23or similar terms that refer to a dealer’s cost for a vehicle in an
24advertisement for the sale of a vehicle or advertise that the selling
25 price of a vehicle is above, below, or at either of the following:
26(A) The manufacturer’s or distributor’s invoice price to a dealer.
27(B) A dealer’s cost.
28(2) This subdivision does not apply to either of the following:
29(A) A communication occurring during face-to-face negotiations
30for the purchase of a specific vehicle if the prospective purchaser
31initiates a discussion of the vehicle’s invoice price or the dealer’s
32cost for that vehicle.
33(B) A communication between a dealer and a prospective
34commercial purchaser that is not disseminated to the general public.
35For purposes of this subparagraph, a “commercial purchaser”
36means a dealer, lessor, lessor-retailer, manufacturer,
37remanufacturer, distributor, financial institution, governmental
38entity, or person who purchases 10 or more vehicles during a year.
39(o) Violate a law prohibiting bait and switch advertising,
40including, but not limited to, the guides against bait advertising
P17 1set forth in Part 238 (commencing with Section 238) of Title 16
2of the Code of Federal Regulations, as those regulations read on
3January 1, 1988.
4(p) Make an untrue or misleading statement indicating that a
5vehicle is equipped with all the factory-installed optional equipment
6the manufacturer offers, including, but not limited to, a false
7statement that a vehicle is “fully factory equipped.”
8(q) Affix on a new vehicle a supplemental price sticker
9containing a price that represents the dealer’s asking price that
10exceeds the manufacturer’s suggested retail price unless all of the
11 following occur:
12(1) The supplemental sticker clearly and conspicuously discloses
13in the largest print appearing on the sticker, other than the print
14size used for the dealer’s name, that the supplemental sticker price
15is the dealer’s asking price, or words of similar import, and that it
16is not the manufacturer’s suggested retail price.
17(2) The supplemental sticker clearly and conspicuously discloses
18the manufacturer’s suggested retail price.
19(3) The supplemental sticker lists each item that is not included
20in the manufacturer’s suggested retail price, and discloses the
21additional price of each item. If the supplemental sticker price is
22greater than the sum of the manufacturer’s suggested retail price
23and the price of the items added by the dealer, the supplemental
24sticker price shall set forth that difference and describe it as “added
26(r) Advertise an underselling claim, including, but not limited
27to, “we have the lowest prices” or “we will beat any dealer’s price,”
28unless the dealer has conducted a recent survey showing that the
29dealer sells its vehicles at lower prices than another licensee in its
30trade area and maintains records to adequately substantiate the
31claims. The substantiating records shall be made available to the
32department upon request.
33(s) (1) Advertise an incentive offered by the manufacturer or
34distributor if the dealer is required to contribute to the cost of the
35incentive as a condition of participating in the incentive program,
36unless the dealer discloses in a clear and conspicuous manner that
37dealer participation may affect consumer cost.
38(2) For purposes of this subdivision, “incentive” means anything
39of value offered to induce people to purchase a vehicle, including,
P18 1but not limited to, discounts, savings claims, rebates, below-market
2finance rates, and free merchandise or services.
3(t) Display or offer for sale a used vehicle unless there is affixed
4to the vehicle the Federal Trade Commission’s Buyer’s Guide as
5required by Part 455 of Title 16 of the Code of Federal Regulations.
6(u) Fail to disclose in writing to the franchisor of a new motor
7vehicle dealer the name of the purchaser, date of sale, and the
8vehicle identification number of each new motor vehicle sold of
9the line-make of that franchisor, or intentionally submit to that
10franchisor a false name for the purchaser or false date for the date
12(v) Enter into a contract for the retail sale of a motor vehicle
13 unless the contract clearly and conspicuously discloses whether
14the vehicle is being sold as a new vehicle or a used vehicle, as
15defined in this code.
16(w) Use a simulated check, as defined in subdivision (a) of
17Section 22433 of the Business and Professions Code, in an
18advertisement for the sale or lease of a vehicle.
19(x) Fail to disclose, in a clear and conspicuous manner in at
20least 10-point boldface type on the face of a contract for the retail
21sale of a new motor vehicle that this transaction is, or is not, subject
22to a fee received by an autobroker from the selling new motor
23vehicle dealer, and the name of the autobroker, if applicable.
24(y) Sell or lease a new motor vehicle after October 1, 2012,
25unless the dealer has a contractual agreement with the department
26to be a private industry partner pursuant to Section 1685. This
27subdivision does not apply to the sale or lease of a motorcycle or
28off-highway motor vehicle subject to identification under Section
2938010 or a recreational vehicle as defined in Section 18010 of the
30Health and Safety Code.
31(z) As used in this section, “make” and “model” have the same
32meaning as is provided in Section 565.12 of Title 49 of the Code
33of Federal Regulations.
Section 11713.3 of the Vehicle Code is amended to
It is unlawful and a violation of this code for a
37manufacturer, manufacturer branch, distributor, or distributor
38branch licensed pursuant to this code to do, directly or indirectly
39through an affiliate, any of the following:
P19 1(a) To refuse or fail to deliver in reasonable quantities and within
2a reasonable time after receipt of an order from a dealer having a
3franchise for the retail sale of a new vehicle sold or distributed by
4the manufacturer or distributor, a new vehicle or parts or
5accessories to new vehicles as are covered by the franchise, if the
6vehicle, parts, or accessories are publicly advertised as being
7available for delivery or actually being delivered. This subdivision
8is not violated, however, if the failure is caused by acts or causes
9beyond the control of the manufacturer, manufacturer branch,
10distributor, or distributor branch.
11(b) To prevent or require, or attempt to prevent or require, by
12contract or otherwise, a change in the capital structure of a
13dealership or the means by or through which the dealer finances
14the operation of the dealership, if the dealer at all times meets
15reasonable capital standards agreed to by the dealer and the
16manufacturer or distributor, and if a change in capital structure
17does not cause a change in the principal management or have the
18effect of a sale of the franchise without the consent of the
19manufacturer or distributor.
20(c) To prevent or require, or attempt to prevent or require, a
21dealer to change the executive management of a dealership, other
22than the principal dealership operator or operators, if the franchise
23was granted to the dealer in reliance upon the personal
24qualifications of that person.
25(d) (1) Except as provided in subdivision (t), to prevent or
26require, or attempt to prevent or require, by contract or otherwise,
27a dealer, or an officer, partner, or stockholder of a dealership, the
28sale or transfer of a part of the interest of any of them to another
29person. A dealer, officer, partner, or stockholder shall not, however,
30have the right to sell, transfer, or assign the franchise, or a right
31thereunder, without the consent of the manufacturer or distributor
32except that the consent shall not be unreasonably withheld.
33(2) (A) For the
transferring franchisee to fail, prior to the sale,
34transfer, or assignment of a franchisee or the sale, assignment, or
35transfer of all, or substantially all, of the assets of the franchised
36business or a controlling interest in the franchised business to
37another person, to notify the manufacturer or distributor of the
38franchisee’s decision to sell, transfer, or assign the franchise. The
39notice shall be in writing and shall include all of the following:
40(i) The proposed transferee’s name and address.
P20 1(ii) A copy of all of the agreements relating to the sale,
2assignment, or transfer of the franchised business or its assets.
3(iii) The proposed transferee’s application for approval to
4become the successor franchisee. The application shall include
5forms and related information generally utilized by the
6manufacturer or distributor in reviewing prospective franchisees,
7if those forms are readily made available to existing franchisees.
8As soon as practicable after receipt of the proposed transferee’s
9application, the manufacturer or distributor shall notify the
10franchisee and the proposed transferee of information needed to
11make the application complete.
12(B) For the manufacturer or distributor, to fail, on or before 60
13days after the receipt of all of the information required pursuant
14to subparagraph (A), or as extended by a written agreement
15between the manufacturer or distributor and the franchisee, to
16notify the franchisee of the approval or the disapproval of the sale,
17transfer, or assignment of the franchise. The notice shall be in
18writing and shall be personally served or sent by certified mail,
19return receipt requested, or by guaranteed overnight delivery
20service that provides verification of delivery and shall be directed
21to the franchisee. A proposed sale, assignment, or transfer shall
22be deemed approved, unless disapproved by the franchisor in the
23manner provided by this subdivision. If the proposed sale,
24assignment, or transfer is disapproved, the franchisor shall include
25in the notice of disapproval a statement setting forth the reasons
26for the disapproval.
27(3) In an action in which the manufacturer’s or distributor’s
28withholding of consent under this subdivision or subdivision (e)
29is an issue, whether the withholding of consent was unreasonable
30is a question of fact requiring consideration of all the existing
32(e) To prevent, or attempt to prevent, a dealer from receiving
33fair and reasonable compensation for the value of the franchised
34business. There shall not be a transfer or assignment of the dealer’s
35franchise without the consent of the manufacturer or distributor,
36which consent shall not be unreasonably withheld or conditioned
37upon the release, assignment, novation, waiver, estoppel, or
38modification of a claim or defense by the dealer.
39(f) To obtain money, goods, services, or another benefit from
40a person with whom the dealer does business, on account of, or in
P21 1relation to, the transaction between the dealer and that other person,
2other than for compensation for services rendered, unless the
3benefit is promptly accounted for, and transmitted to, the dealer.
4(g) (1) Except as provided in paragraph (3), to obtain from a
5dealer or enforce against a dealer an agreement, provision, release,
6assignment, novation, waiver, or estoppel that does any of the
8(A) Modifies or disclaims a duty or obligation of a manufacturer,
9manufacturer branch, distributor, distributor branch, or
10representative, or a right or privilege of a dealer, pursuant to
11Chapter 4 (commencing with Section 11700) of Division 5 or
12Chapter 6 (commencing with Section 3000) of Division 2.
13(B) Limits or constrains the right of a dealer to file, pursue, or
14submit evidence in connection with a protest before the board.
15(C) Requires a dealer to terminate a franchise.
16(D) Requires a controversy between a manufacturer,
17manufacturer branch, distributor, distributor branch, or
18representative and a dealer to be referred to a person for a binding
19determination. However, this subparagraph does not prohibit
20arbitration before an independent arbitrator, provided that whenever
21a motor vehicle franchise contract provides for the use of arbitration
22to resolve a controversy arising out of, or relating to, that contract,
23arbitration may be used to settle the controversy only if, after the
24controversy arises, all parties to the controversy consent in writing
25to use arbitration to settle the controversy. For the purpose of this
26subparagraph, the terms “motor vehicle” and “motor vehicle
27franchise contract” shall have the same meaning as defined in
28Section 1226 of Title 15 of the United States Code. If arbitration
29is elected to settle a dispute under a motor vehicle franchise
30contract, the arbitrator shall provide the parties to the arbitration
31with a written explanation of the factual and legal basis for the
33(2) An agreement, provision, release, assignment, novation,
34waiver, or estoppel prohibited by this subdivision shall be
35unenforceable and void.
36(3) This subdivision does not do any of the following:
37(A) Limit or restrict the terms upon which parties to a protest
38before the board, civil action, or other proceeding can settle or
39resolve, or stipulate to evidentiary or procedural matters during
40the course of, a protest, civil action, or other proceeding.
P22 1(B) Affect the enforceability of any stipulated order or
2order entered by the board.
3(C) Affect the enforceability of any provision in a contract if
4the provision is not prohibited under this subdivision or any other
6(D) Affect the enforceability of a provision in any contract
7entered into on or before December 31, 2011.
8(E) Prohibit a dealer from waiving its right to file a protest
9pursuant to Section 3065.1 if the waiver agreement is entered into
10after a franchisor incentive program claim has been disapproved
11by the franchisor and the waiver is voluntarily given as part of an
12agreement to settle that claim.
13(F) Prohibit a voluntary agreement supported by valuable
14consideration, other than granting or renewing a franchise, that
15does both of the following:
16(i) Provides that a dealer establish or maintain exclusive
17facilities, personnel, or display space or provides that a dealer
18make a material alteration, expansion, or addition to a dealership
20(ii) Contains no waiver or other provision prohibited by
21subparagraph (A), (B), (C), or (D) of paragraph (1).
22(G) Prohibit an agreement separate from the franchise agreement
23that implements a dealer’s election to terminate the franchise if
24the agreement is conditioned only on a specified time for
25termination or payment of consideration to the dealer.
26(H) (i) Prohibit a
voluntary waiver agreement, supported by
27valuable consideration, other than the consideration of renewing
28a franchise, to waive the right of a dealer to file a protest under
29Section 3062 for the proposed establishment or relocation of a
30specific proposed dealership, if the waiver agreement provides all
31of the following:
32(I) The approximate address at which the proposed dealership
33will be located.
34(II) The planning potential used to establish the proposed
35dealership’s facility, personnel, and capital requirements.
36(III) An approximation of projected vehicle and parts sales, and
37number of vehicles to be serviced at the proposed dealership.
38(IV) Whether the
franchisor or affiliate will hold an ownership
39interest in the proposed dealership or real property of the proposed
P23 1dealership, and the approximate percentage of any franchisor or
2affiliate ownership interest in the proposed dealership.
3(V) The line-makes to be operated at the proposed dealership.
4(VI) If known at the time the waiver agreement is executed, the
5identity of the dealer who will operate the proposed dealership.
6(VII) The date the waiver agreement is to expire, which may
7not be more than 30 months after the date of execution of the
9(ii) Notwithstanding the provisions of a waiver agreement
10entered into pursuant to the provisions of this subparagraph, a
11dealer may file a protest under Section 3062 if any of the
12information provided pursuant to clause (i) has become materially
13inaccurate since the waiver agreement was executed. Any
14determination of the enforceability of a waiver agreement shall be
15determined by the board and the franchisor shall have the burden
16 of proof.
17(h) To increase prices of motor vehicles that the dealer had
18ordered for private retail consumers prior to the dealer’s receipt
19of the written official price increase notification. A sales contract
20signed by a private retail consumer is evidence of the order. In the
21event of manufacturer price reductions, the amount of the reduction
22received by a dealer shall be passed on to the private retail
23consumer by the dealer if the retail price was negotiated on the
24basis of the previous higher price to the dealer. Price reductions
25apply to all vehicles in the dealer’s inventory that were subject to
26the price reduction. Price differences applicable to new model or
27series motor vehicles at the time of the introduction of new models
28or series shall not be considered a price increase or price decrease.
29This subdivision does not apply to price changes caused by either
30of the following:
31(1) The addition to a motor vehicle of required or optional
32equipment pursuant to state or federal law.
33(2) Revaluation of the United States dollar in the case of a
35(i) To fail to pay to a dealer, within a reasonable time following
36receipt of a valid claim by a dealer thereof, a payment agreed to
37be made by the manufacturer or distributor to the dealer by reason
38of the fact that a new vehicle of a prior year model is in the dealer’s
39inventory at the time of introduction of new model vehicles.
P24 1(j) To deny the widow, widower, or heirs designated by a
2deceased owner of a dealership the opportunity to participate in
3the ownership of the dealership or successor dealership under a
4valid franchise for a reasonable time after the death of the owner.
5(k) To offer refunds or other types of inducements to a person
6for the purchase of new motor vehicles of a certain line-make to
7be sold to the state or a political subdivision of the state without
8making the same offer to all other dealers in the same line-make
9within the relevant market area.
10(l) To modify, replace, enter into, relocate, terminate, or refuse
11to renew a franchise in violation of Article 4 (commencing with
12Section 3060) or Article 5 (commencing with Section 3070) of
13Chapter 6 of Division 2.
14(m) To employ a person as a representative who has not
15licensed pursuant to Article 3 (commencing with Section 11900)
16of Chapter 4 of Division 5.
17(n) To deny a dealer the right of free association with another
18dealer for a lawful purpose.
19(o) (1) To compete with a dealer in the same line-make
20operating under an agreement or franchise from a manufacturer
21or distributor in the relevant market area.
22(2) A manufacturer, branch, or distributor or an entity that
23controls or is controlled by, a manufacturer, branch, or distributor,
24shall not, however, be deemed to be competing in the following
26(A) Owning or operating a dealership for a temporary period,
27not to exceed one year at the location of a former dealership of the
28same line-make that has been out of operation for less than six
29months. However, after a showing of good cause by a
30manufacturer, branch, or distributor that it needs additional time
31to operate a dealership in preparation for sale to a successor
32independent franchisee, the board may extend the time period.
33(B) Owning an interest in a dealer as part of a bona fide dealer
34development program that satisfies all of the following
36(i) The sole purpose of the program is to make franchises
37available to persons lacking capital, training, business experience,
38or other qualities ordinarily required of prospective franchisees
39and the dealer development candidate is an individual who is
40unable to acquire the franchise without assistance of the program.
P25 1(ii) The dealer development candidate has made a significant
2investment subject to loss in the franchised business of the dealer.
3(iii) The program requires the dealer development candidate to
4manage the day-to-day operations and business affairs of the dealer
5and to acquire, within a reasonable time and on reasonable terms
6and conditions, beneficial ownership and control of a majority
7interest in the dealer and disassociation of any direct or indirect
8ownership or control by the manufacturer, branch, or distributor.
9(C) Owning a wholly owned subsidiary corporation of a
10distributor that sells motor vehicles at retail, if, for at least three
11years prior to January 1, 1973, the subsidiary corporation has been
12a wholly owned subsidiary of the distributor and engaged in the
13sale of vehicles at retail.
14(3) (A) A manufacturer, branch, and distributor that owns or
15operates a dealership in the manner described in subparagraph (A)
16of paragraph (2) shall give written notice to the board, within 10
17days, each time it commences or terminates operation of a
18dealership and each time it acquires, changes, or divests itself of
19an ownership interest.
20(B) A manufacturer, branch, and distributor that owns an interest
21in a dealer in the manner described in subparagraph (B) of
22paragraph (2) shall give written notice to the board, annually, of
23the name and location of each dealer in which it has an ownership
24interest, the name of the bona fide dealer development owner or
25owners, and the ownership interests of each owner expressed as a
27(p) To unfairly discriminate among its franchisees with respect
28to warranty reimbursement or authority granted to its franchisees
29to make warranty adjustments with retail customers.
30(q) To sell vehicles to a person not licensed pursuant to this
31chapter for resale.
32(r) To fail to affix an identification number to a park trailer, as
33described in Section 18009.3 of the Health and Safety Code, that
34is manufactured on or after January 1, 1987, and that does not
35clearly identify the unit as a park trailer to the department. The
36configuration of the identification number shall be approved by
38(s) To dishonor a warranty, rebate, or other incentive offered
39to the public or a dealer in connection with the retail sale of a new
40motor vehicle, based solely upon the fact that an autobroker
P26 1arranged or negotiated the sale. This subdivision shall not prohibit
2the disallowance of that rebate or incentive if the purchaser or
3dealer is ineligible to receive the rebate or incentive pursuant to
4any other term or condition of a rebate or incentive program.
5(t) To exercise a right of first refusal or other right requiring a
6franchisee or an owner of the franchise to sell, transfer, or assign
7to the franchisor, or to a nominee of the franchisor, all or a material
8part of the franchised business or of the assets of the franchised
9business unless all of the following requirements are met:
10(1) The franchise authorizes the franchisor to exercise a right
11of first refusal to acquire the franchised business or assets of the
12franchised business in the event of a proposed sale, transfer, or
14(2) The franchisor gives written notice of its exercise of the
15right of first refusal no later than 45 days after the franchisor
16receives all of the information required pursuant to subparagraph
17(A) of paragraph (2) of subdivision (d).
18(3) The sale, transfer, or assignment being proposed relates to
19not less than all or substantially all of the assets of the franchised
20business or to a controlling interest in the franchised business.
21(4) The proposed
transferee is neither a family member of an
22owner of the franchised business, nor a managerial employee of
23the franchisee owning 15 percent or more of the franchised
24business, nor a corporation, partnership, or other legal entity owned
25by the existing owners of the franchised business. For purposes of
26this paragraph, a “family member” means the spouse of an owner
27of the franchised business, the child, grandchild, brother, sister,
28or parent of an owner, or a spouse of one of those family members.
29This paragraph does not limit the rights of the franchisor to
30disapprove a proposed transferee as provided in subdivision (d).
31(5) Upon the franchisor’s exercise of the right of first refusal,
32the consideration paid by the franchisor to the franchisee and
33owners of the franchised business shall equal or exceed all
34consideration that each of them were to have received under the
35terms of, or in connection with, the proposed sale, assignment, or
36transfer, and the franchisor shall comply with all the terms and
37conditions of the agreement or agreements to sell, transfer, or
38assign the franchised business.
39(6) The franchisor shall reimburse the proposed transferee for
40expenses paid or incurred by the proposed transferee in evaluating,
P27 1investigating, and negotiating the proposed transfer to the extent
2those expenses do not exceed the usual, customary, and reasonable
3fees charged for similar work done in the area in which the
4 franchised business is located. These expenses include, but are not
5limited to, legal and accounting expenses, and expenses incurred
6for title reports and environmental or other investigations of real
7property on which the franchisee’s operations are conducted. The
8proposed transferee shall provide the franchisor a written
9itemization of those expenses, and a copy of all nonprivileged
10reports and studies for which expenses were incurred, if any, within
1130 days of the proposed transferee’s receipt of a written request
12from the franchisor for that accounting. The franchisor shall make
13payment within 30 days of exercising the right of first refusal.
14(u) (1) To unfairly discriminate in favor of a dealership owned
15or controlled, in whole or in part, by a manufacturer or distributor
16or an entity that controls or is controlled by the manufacturer or
17distributor. Unfair discrimination includes, but is not limited to,
19(A) The furnishing to a franchisee or dealer that is owned or
20controlled, in whole or in part, by a manufacturer, branch, or
21distributor of any of the following:
22(i) A vehicle that is not made available to each franchisee
23pursuant to a reasonable allocation formula that is applied
24uniformly, and a part or accessory that is not made available to all
25franchisees on an equal basis when there is no reasonable allocation
26formula that is applied uniformly.
27(ii) A vehicle, part, or accessory that is not made available to
28each franchisee on comparable delivery terms, including the time
29of delivery after the placement of an order. Differences in delivery
30terms due to geographic distances or other factors beyond the
31control of the manufacturer, branch, or distributor shall not
32constitute unfair competition.
33(iii) Information obtained from a franchisee by the manufacturer,
34branch, or distributor concerning the business affairs or operations
35of a franchisee in which the manufacturer, branch, or distributor
36does not have an ownership interest. The information includes,
37but is not limited to, information contained in financial statements
38and operating reports, the name, address, or other personal
39information or buying, leasing, or service behavior of a dealer
40customer, and other information that, if provided to a franchisee
P28 1or dealer owned or controlled by a manufacturer or distributor,
2would give that franchisee or dealer a competitive advantage. This
3clause does not apply if the information is provided pursuant to a
4subpoena or court order, or to aggregated information made
5available to all franchisees.
6(iv) Sales or service incentives, discounts, or promotional
7programs that are not made available to all California franchises
8of the same line-make on an equal basis.
9(B) Referring a prospective purchaser or lessee to a dealer in
10which a manufacturer, branch, or distributor has an ownership
11interest, unless the prospective purchaser or lessee resides in the
12area of responsibility assigned to that dealer or the prospective
13purchaser or lessee requests to be referred to that dealer.
14(2) This subdivision does not prohibit a franchisor from granting
15a franchise to prospective franchisees or assisting those franchisees
16during the course of the franchise relationship as part of a program
17or programs to make franchises available to persons lacking capital,
18training, business experience, or other qualifications ordinarily
19required of prospective franchisees.
20(v) (1) To access, modify, or extract information from a
21confidential dealer computer record, as defined in Section
2211713.25, without obtaining the prior written consent of the dealer
23and without maintaining administrative, technical, and physical
24safeguards to protect the security, confidentiality, and integrity of
26(2) Paragraph (1) does not limit a duty that a dealer may have
27to safeguard the security and privacy of records maintained by the
29(w) (1) To use electronic, contractual, or other means to prevent
30or interfere with any of the following:
31(A) The lawful efforts of a dealer to comply with federal and
32state data security and privacy laws.
33(B) The ability of a dealer to do either of the following:
34(i) Ensure that specific data accessed from the dealer’s computer
35system is within the scope of consent specified in subdivision (v).
36(ii) Monitor specific data accessed from or written to the dealer’s
38(2) Paragraph (1) does not limit a duty that a dealer
39to safeguard the security and privacy of records maintained by the
P29 1(x) (1) To unfairly discriminate against a franchisee selling a
2service contract, debt cancellation agreement, maintenance
3agreement, or similar product not approved, endorsed, sponsored,
4or offered by the manufacturer, manufacturer branch, distributor,
5or distributor branch or affiliate. For purposes of this subdivision,
6unfair discrimination includes, but is not limited to, any of the
8(A) Express or implied statements that the dealer is under an
9obligation to exclusively sell or offer to sell service contracts, debt
10cancellation agreements, or similar products approved, endorsed,
11sponsored, or offered by the manufacturer, manufacturer branch,
12distributor, or distributor branch or affiliate.
13(B) Express or implied statements that selling or offering to sell
14service contracts, debt cancellation agreements, maintenance
15agreements, or similar products not approved, endorsed, sponsored,
16or offered by the manufacturer, manufacturer branch, distributor,
17or distributor branch or affiliate, or the failure to sell or offer to
18sell service contracts, debt cancellation agreements, maintenance
19agreements, or similar products approved, endorsed, sponsored,
20or offered by the manufacturer, manufacturer branch, distributor,
21or distributor branch or affiliate will have any negative
22consequences for the dealer.
23(C) Measuring a dealer’s performance under a franchise
24agreement based upon the sale of service contracts, debt
25cancellation agreements, or similar products approved, endorsed,
26sponsored, or offered by the manufacturer, manufacturer branch,
27distributor, or distributor branch or affiliate.
28(D) Requiring a dealer to actively promote the sale of service
29contracts, debt cancellation agreements, or similar products
30approved, endorsed, sponsored, or offered by the manufacturer,
31manufacturer branch, distributor, or distributor branch or affiliate.
32(E) Conditioning access to vehicles or parts, or vehicle sales or
33service incentives upon the sale of service contracts, debt
34cancellation agreements, or similar products approved, endorsed,
35sponsored, or offered by the manufacturer, manufacturer branch,
36distributor, or distributor branch or affiliate.
discrimination does not include, and nothing shall
38prohibit a manufacturer from, offering an incentive program to
39vehicle dealers who voluntarily sell or offer to sell service
40contracts, debt cancellation agreements, or similar products
P30 1approved, endorsed, sponsored, or offered by the manufacturer,
2manufacturer branch, distributor, or distributor branch or affiliate,
3if the program does not provide vehicle sales or service incentives.
4(3) This subdivision does not prohibit a manufacturer,
5manufacturer branch, distributor, or distributor branch from
6requiring a franchisee that sells a used vehicle as “certified” under
7a certified used vehicle program established by the manufacturer,
8manufacturer branch, distributor, or distributor branch to provide
9a service contract approved, endorsed, sponsored, or offered by
10the manufacturer, manufacturer branch, distributor, or distributor
12(4) Unfair discrimination does not include, and nothing shall
13prohibit a franchisor from requiring a franchisee to provide, the
14following notice prior to the sale of the service contract if the
15service contract is not provided or backed by the franchisor and
16the vehicle is of the franchised line-make:
18“Service Contract Disclosure
19The service contract you are purchasing is not provided or backed
20by the manufacturer of the vehicle you are purchasing. The
21manufacturer of the vehicle is not responsible for claims or repairs
22under this service contract.
24Signature of Purchaser”
26(y) To take or threaten to take any adverse action against a
27pursuant to an export or sale-for-resale prohibition because the
28dealer sold or leased a vehicle to a customer who either exported
29the vehicle to a foreign country or resold the vehicle in violation
30of the prohibition, unless the export or sale-for-resale prohibition
31policy was provided to the dealer in writing prior to the sale or
32lease, and the dealer knew or reasonably should have known of
33the customer’s intent to export or resell the vehicle in violation of
34the prohibition at the time of sale or lease. If the dealer causes the
35vehicle to be registered in this or any other state, and collects or
36causes to be collected any applicable sales or use tax due to this
37state, a rebuttable presumption is established that the dealer did
38not have reason to know of the customer’s intent to export or resell
P31 1(z) As used in this
section, “area of responsibility” is a
2geographic area specified in a franchise that is used by the
3franchisor for the purpose of evaluating the franchisee’s
4performance of its sales and service obligations.
Section 11713.23 of the Vehicle Code is amended to
(a) A recreational vehicle manufacturer,
8manufacturer branch, distributor, or distributor branch licensed
9under this code shall not sell a new recreational vehicle in this
10state to or through a recreational vehicle dealer without having
11first entered into a written recreational vehicle franchise with that
12recreational vehicle dealer, that complies with the requirements
13of Section 331.3 and that has been signed by both parties.
14(b) A recreational vehicle dealer shall not sell a new recreational
15vehicle in this state without having first entered into a written
16recreational vehicle franchise, that complies with the requirements
17of Section 331.3, with a recreational vehicle manufacturer,
18manufacturer branch, distributor, or distributor branch licensed
19under this code, that has been signed by both parties.
20(c) (1) A recreational vehicle manufacturer, manufacturer
21branch, distributor, or distributor branch shall not ship a new
22recreational vehicle to a recreational dealer on or after January 1,
232009, without a recreational vehicle franchise that has been signed
24by both parties.
25(2) A recreational vehicle dealer shall not receive a new
26recreational vehicle from a recreational vehicle manufacturer,
27manufacturer branch, distributor, or distributor branch on or after
28January 1, 2009, without a recreational vehicle franchise that has
29been signed by both parties.
30(d) Any new recreational vehicle inventory that has been
31purchased by a recreational vehicle dealer, or shipped by a
32manufacturer, manufacturer branch, distributor, or distributor
33branch, before January 1, 2009, may be sold at any time without
34a recreational vehicle franchise.
35(e) Following the termination, cancellation, or nonrenewal of
36a recreational vehicle franchise, any new recreational vehicle
37inventory that was purchased by the recreational vehicle dealer,
38or shipped by a manufacturer, manufacturer branch, distributor,
39or distributor branch, during the period that the written recreational
P32 1vehicle franchise was in effect, may be sold by that recreational
2vehicle dealer at any time.
3(f) This section applies only to a dealer and manufacturer
4agreement involving recreational vehicles, as defined in subdivision
5(a) of Section 18010 of the Health and Safety Code, but does not
6include an agreement with a dealer who deals exclusively in truck
No reimbursement is required by this act pursuant to
9Section 6 of Article XIII B of the California Constitution because
10the only costs that may be incurred by a local agency or school
11district will be incurred because this act creates a new crime or
12infraction, eliminates a crime or infraction, or changes the penalty
13for a crime or infraction, within the meaning of Section 17556 of
14the Government Code, or changes the definition of a crime within
15the meaning of Section 6 of Article XIII B of the California