Amended in Senate August 31, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 759

Introduced by Assembly Member Linder

February 25, 2015

An act to amend Sections 3010, begin insert 3050.7, end insert 3066, 3067, 3068, 3072, 3072.5, 3073, 3074, 3078, 3079, 11705, 11713.1, 11713.3, and 11713.23 of, and to add Sections 3080, 3081, and 3082 to, the Vehicle Code, relating to recreational vehicles.

LEGISLATIVE COUNSEL’S DIGEST

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 1.  

Section 3010 of the Vehicle Code is amended to
read:

3010.  

Five members of the board shall constitute a quorum for
the transaction of business, for the performance of any duty or the
exercise of any power or authority of the board, except that three
members of the board, who are not new motor vehicle dealers,
shall constitute a quorum for the purposes of Article 4
(commencing with Section 3060) and Article 5 (commencing with
Section 3070) and the consideration of a petition pursuant to
subdivision (c) of Section 3050 that involves a dispute between a
franchisee and franchisor.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 3050.7 of the end insert begin insert Vehicle Code end insert begin insert is amended to read: end insert

3050.7.  

(a) The board may adopt stipulated decisions and
orders, without a hearing pursuant to begin delete Section 3066, end delete begin insert Section 3066
or 3080, end insert to resolve one or more issues raised by a protest or petition
filed with the board. Whenever the parties to a protest or petition
submit a proposed stipulated decision and order of the board, a
copy of the proposed stipulated decision and order shall be
transmitted by the executive director of the board to each member
of the board. The proposed stipulated decision and order shall be
deemed to be adopted by the board unless a member of the board
notifies the executive director of the board of an objection thereto
within 10 days after that board member has received a copy of the
proposed stipulated decision and order.

(b) If the board adopts a stipulated decision and order to resolve
a protest filed pursuant to Section 3060 or 3070 in which the parties
stipulate that good cause exists for the termination of the franchise
of the protestant, and the order provides for a conditional or
unconditional termination of the franchise of the protestant,
paragraph (2) of subdivision (a) of Section 3060 and paragraph
(2) of subdivision (a) of Section 3070, which require a hearing to
determine whether good cause exists for termination of the
franchise, is inapplicable to the proceedings. If the stipulated
decision and order provides for an unconditional termination of
the franchise, the franchise may be terminated without further
proceedings by the board. If the stipulated decision and order
provides for the termination of the franchise, conditioned upon the
failure of a party to comply with specified conditions, the franchise
may be terminated upon a determination, according to the terms
of the stipulated decision and order, that the conditions have not
been met. If the stipulated decision and order provides for the
termination of the franchise conditioned upon the occurrence of
specified conditions, the franchise may be terminated upon a
determination, according to the terms of the stipulated decision
and order, that the stipulated conditions have occurred.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section 3066 of the Vehicle Code is amended to read:

3066.  

(a) Upon receiving a protest pursuant to Section 3060,
3062, 3064, 3065, or 3065.1, the board shall fix a time within 60
days of the order, and place of hearing, and shall send by certified
mail a copy of the order to the franchisor, the protesting franchisee,
and all individuals and groups that have requested notification by
the board of protests and decisions of the board. Except in a case
involving a franchisee who deals exclusively in motorcycles, the
board or its executive director may, upon a showing of good cause,
accelerate or postpone the date initially established for a hearing,
but the hearing shall not be rescheduled more than 90 days after
the board’s initial order. For the purpose of accelerating or
postponing a hearing date, “good cause” includes, but is not limited
to, the effects upon, and any irreparable harm to, the parties or
interested persons or groups if the request for a change in hearing
date is not granted. The board or an administrative law judge
designated by the board shall hear and consider the oral and
documented evidence introduced by the parties and other interested
individuals and groups, and the board shall make its decision solely
on the record so made. Chapter 4.5 (commencing with Section
11400) of Part 1 of Division 3 of Title 2 of the Government Code
and Sections 11507.3, 11507.6, 11507.7, 11511, 11511.5, 11513,
11514, 11515, and 11517 of the Government Code apply to these
proceedings.

(b) In a hearing on a protest filed pursuant to Section 3060 or
3062 the franchisor shall have the burden of proof to establish that
there is good cause to modify, replace, terminate, or refuse to
continue a franchise. The franchisee shall have the burden of proof
to establish that there is good cause not to enter into a franchise
establishing an additional motor vehicle dealership or relocating
an existing motor vehicle dealership.

(c) Except as otherwise provided in this chapter, in a hearing
on a protest alleging a violation of, or filed pursuant to, Section
3064, begin delete 3065 end delete begin insert 3065, end insert or 3065.1, the franchisee shall have the burden
of proof, but the franchisor has the burden of proof to establish
that a franchisee acted with intent to defraud the franchisor when
that issue is material to a protest filed pursuant to Section 3065 or
3065.1.

(d) A member of the board who is a new motor vehicle dealer
may not participate in, hear, comment, or advise other members
upon, or decide, a matter involving a protest filed pursuant to this
article unless all parties to the protest stipulate otherwise.

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Section 3067 of the Vehicle Code is amended to read:

3067.  

(a) The decision of the board shall be in writing and
shall contain findings of fact and a determination of the issues
presented. The decision shall sustain, conditionally sustain,
overrule, or conditionally overrule the protest. Conditions imposed
by the board shall be for the purpose of assuring performance of
binding contractual agreements between franchisees and franchisors
or otherwise serving the purposes of this article. If the board fails
to act within 30 days after the hearing, within 30 days after the
board receives a proposed decision when the case is heard before
an administrative law judge alone, or within a period necessitated
by Section 11517 of the Government Code, or as may be mutually
agreed upon by the parties, then the proposed action shall be
deemed to be approved. Copies of the board’s decision shall be
delivered to the parties personally or sent to them by certified mail,
as well as to all individuals and groups that have requested
notification by the board of protests and decisions by the board.
The board’s decision shall be final upon its delivery or mailing
and a reconsideration or rehearing is not permitted.

(b) Notwithstanding subdivision (c) of Section 11517 of the
Government Code, if a protest is heard by an administrative law
judge alone, 10 days after receipt by the board of the administrative
law judge’s proposed decision, a copy of the proposed decision
shall be filed by the board as a public record and a copy shall be
served by the board on each party and his or her attorney.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section 3068 of the Vehicle Code is amended to read:

3068.  

Either party may seek judicial review of final decisions
of the board. Time for filing for the review shall not be more than
45 days from the date on which the final order of the board is made
public and is delivered to the parties personally or is sent to them
by certified mail.

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

Section 3072 of the Vehicle Code is amended to read:

3072.  

(a) (1) Except as otherwise provided in subdivision (b),
if a franchisor seeks to enter into a franchise establishing an
additional recreational vehicle dealership, or seeks to relocate an
existing recreational vehicle dealership, that has a relevant market
area in which the same recreational vehicle line-make is
represented, the franchisor shall, in writing, first notify the board
and each franchisee in that recreational vehicle line-make in the
relevant market area of the franchisor’s intention to establish an
additional dealership or to relocate an existing dealership. Within
20 days of receiving the notice, satisfying the requirements of this
section, or within 20 days after the end of any appeal procedure
provided by the franchisor, any franchisee required to be given
the notice may file with the board a protest to the proposed
dealership establishment or relocation described in the franchisor’s
notice. If, within this time, a franchisee files with the board a
request for additional time to file a protest, the board or its
executive director, upon a showing of good cause, may grant an
additional 10 days to file the protest. When a protest is filed, the
board shall inform the franchisor that a timely protest has been
filed, that a hearing is required pursuant to Section 3080, and that
the franchisor shall not establish the proposed dealership or relocate
the existing dealership until the board has held a hearing as
provided in Section 3080, nor thereafter, if the board has
determined that there is good cause for not permitting the
establishment of the proposed recreational vehicle dealership or
relocation of the existing recreational vehicle dealership. In the
event of multiple protests, hearings may be consolidated to expedite
the disposition of the issue.

(2) The written notice shall contain, on the first page thereof in
at least 12-point bold type and circumscribed by a line to segregate
it from the rest of the text, the following statement:

“NOTICE TO DEALER: You have the right to file a protest
with the NEW MOTOR VEHICLE BOARD in Sacramento and
have a hearing on your protest under the terms of the California
Vehicle Code if you oppose this action. You must file your protest
with the board within 20 days of your receipt of this notice, or
within 20 days after the end of any appeal procedure that is
provided by us to you. If, within this time, you file with the board
a request for additional time to file a protest, the board or its
executive director, upon a showing of good cause, may grant you
an additional 10 days to file the protest.”

(b) Subdivision (a) does not apply to any of the following:

(1) The relocation of an existing dealership to any location that
is both within the same city as, and within one mile of, the existing
dealership location.

(2) The establishment at any location that is both within the
same city as, and within one-quarter mile of, the location of a
dealership of the same recreational vehicle line-make that has been
out of operation for less than 90 days.

(3) A display of vehicles at a fair, exposition, or similar exhibit
if no actual sales are made at the event and the display does not
exceed 30 days. This paragraph may not be construed to prohibit
a new vehicle dealer from establishing a branch office for the
purpose of selling vehicles at the fair, exposition, or similar exhibit,
even though that event is sponsored by a financial institution, as
defined in Section 31041 of the Financial Code, or by a financial
institution and a licensed dealer. The establishment of these branch
offices, however, shall be in accordance with subdivision (a) where
applicable.

(4) An annual show sponsored by a national trade association
of recreational vehicle manufacturers that complies with all of the
requirements of subdivision (d) of Section 11713.15.

(c) For the purposes of this section, the reopening of a dealership
that has not been in operation for one year or more shall be deemed
the establishment of an additional recreational vehicle dealership.

(d) For the purposes of this section and Section 3073, a
“recreational vehicle dealership” or “dealership” is any authorized
facility at which a franchisee offers for sale or lease, displays for
sale or lease, or sells or leases new recreational vehicles, as defined
in subdivision (a) of Section 18010 of the Health and Safety Code.
A “recreational vehicle dealership” or “dealership” does not include
a dealer who deals exclusively in truck campers.

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

Section 3072.5 of the Vehicle Code is amended to
read:

3072.5.  

For the purposes of this article, a “recreational vehicle
line-make” is a group or groups of recreational vehicles defined
by the terms of a written agreement that complies with Section
331.3.

begin delete SEC. 7. end delete
begin insert SEC. 8. end insert   

Section 3073 of the Vehicle Code is amended to read:

3073.  

In determining whether good cause has been established
for not entering into a recreational vehicle franchise or relocating
an existing dealership of the same recreational vehicle line-make,
the board shall take into consideration the existing circumstances,
including, but not limited to, all of the following:

(a) The permanency of the investment.

(b) The effect on the retail recreational vehicle business and the
consuming public in the relevant market area.

(c) Whether it is injurious to the public welfare for an additional
recreational vehicle franchise to be established or an existing
dealership be relocated.

(d) Whether the franchisees of the same recreational vehicle
line-make in the relevant market area are providing adequate
competition and convenient consumer care for the motor vehicles
of the recreational vehicle line-make in the market area. In making
this determination, the board shall consider the adequacy of
recreational vehicle sales and, if required by the franchise, service
facilities, equipment, supply of vehicle parts, and qualified service
personnel.

(e) Whether the establishment of an additional franchise would
increase competition and therefore be in the public interest.

begin delete SEC. 8. end delete
begin insert SEC. 9. end insert   

Section 3074 of the Vehicle Code is amended to read:

3074.  

(a) A franchisor shall specify to its franchisees the
delivery and preparation obligations of the franchisees prior to
delivery of new recreational vehicles to retail buyers. A copy of
the delivery and preparation obligations, which shall constitute
the franchisee’s only responsibility for product liability between
the franchisee and the franchisor but which shall not in any way
affect the franchisee’s responsibility for product liability between
the purchaser and either the franchisee or the franchisor, and a
schedule of compensation to be paid franchisees for the work and
services they shall be required to perform in connection with the
delivery and preparation obligations shall be filed with the board
by franchisors, and shall constitute the compensation as set forth
on the schedule. The schedule of compensation shall be reasonable,
with the reasonableness thereof being subject to the approval of
the board, if a franchisee files a notice of protest with the board.
In determining the reasonableness of the schedules, the board shall
consider all relevant circumstances, including, but not limited to,
the time required to perform each function that the dealer is
obligated to perform and the appropriate labor rate.

(b) Upon delivery of the vehicle, the franchisee shall give a
copy of the delivery and preparation obligations to the purchaser
and a written certification that the franchisee has fulfilled these
obligations.

begin delete SEC. 9. end delete
begin insert SEC. 10. end insert   

Section 3078 of the Vehicle Code is amended to read:

3078.  

(a) If the board receives a complaint from a member of
the public seeking a refund involving the sale or lease of, or a
replacement of, a recreational vehicle, as defined in subdivision
(a) of Section 18010 of the Health and Safety Code, from a
recreational vehicle dealership, as defined in subdivision (d) of
Section 3072, the board shall recommend that the complainant
consult with the Department of Consumer Affairs.

(b) This chapter does not affect a person’s rights regarding a
transaction involving a recreational vehicle as defined in
subdivision (a), to maintain an action under any other statute,
including, but not limited to, applicable provisions of Title 1.7
(commencing with Section 1790) of Part 4 of Division 3 of the
Civil Code.

begin delete SEC. 10. end delete
begin insert SEC. 11. end insert   

Section 3079 of the Vehicle Code is amended to read:

3079.  

This article applies only to a recreational vehicle
franchise entered into or renewed on or after January 1, 2004.

begin delete SEC. 11. end delete
begin insert SEC. 12. end insert   

Section 3080 is added to the Vehicle Code, to read:

3080.  

(a) Upon receiving a protest pursuant to Section 3070,
3072, 3074, 3075, or 3076, the board shall fix a time and place of
hearing within 60 days of the order, and shall send by certified
mail a copy of the order to the franchisor, the protesting franchisee,
and all individuals and groups that have requested notification by
the board of protests and decisions of the board. The board or its
executive director may, upon a showing of good cause, accelerate
or postpone the date initially established for a hearing, but the
hearing shall not be rescheduled more than 90 days after the board’s
initial order. For the purpose of accelerating or postponing a
hearing date, “good cause” includes, but is not limited to, the
effects upon, and any irreparable harm to, the parties or interested
persons or groups if the request for a change in hearing date is not
granted. The board or an administrative law judge designated by
the board shall hear and consider the oral and documented evidence
introduced by the parties and other interested individuals and
groups, and the board shall make its decision solely on the record
so made. Chapter 4.5 (commencing with Section 11400) of Part
1 of Division 3 of Title 2 of the Government Code and Sections
11507.3, 11507.6, 11507.7, 11511, 11511.5, 11513, 11514, 11515,
and 11517 of the Government Code apply to these proceedings.

(b) In a hearing on a protest filed pursuant to Section 3070 or
3072, the franchisor shall have the burden of proof to establish
that there is good cause to modify, replace, terminate, or refuse to
continue a franchise. The franchisee shall have the burden of proof
to establish that there is good cause not to enter into a franchise
establishing an additional recreational vehicle dealership or
relocating an existing recreational vehicle dealership.

(c) Except as otherwise provided in this chapter, in a hearing
on a protest alleging a violation of, or filed pursuant to, Section
3074, 3075, or 3076, the franchisee shall have the burden of proof,
but the franchisor has the burden of proof to establish that a
franchisee acted with intent to defraud the franchisor when that
issue is material to a protest filed pursuant to Section 3075 or 3076.

begin delete SEC. 12. end delete
begin insert SEC. 13. end insert   

Section 3081 is added to the Vehicle Code, to read:

3081.  

(a) The decision of the board shall be in writing and
shall contain findings of fact and a determination of the issues
presented. The decision shall sustain, conditionally sustain,
overrule, or conditionally overrule the protest. Conditions imposed
by the board shall be for the purpose of assuring performance of
binding contractual agreements between franchisees and franchisors
or otherwise serving the purposes of this article. If the board fails
to act within 30 days after the hearing, within 30 days after the
board receives a proposed decision when the case is heard before
an administrative law judge alone, or within a period necessitated
by Section 11517 of the Government Code, or as may be mutually
agreed upon by the parties, then the proposed action shall be
deemed to be approved. Copies of the board’s decision shall be
delivered to the parties personally or sent to them by certified mail,
as well as to all individuals and groups that have requested
notification by the board of protests and decisions by the board.
The board’s decision shall be final upon its delivery or mailing
and a reconsideration or rehearing is not permitted.

(b) Notwithstanding subdivision (c) of Section 11517 of the
Government Code, if a protest is heard by an administrative law
judge alone, 10 days after receipt by the board of the administrative
law judge’s proposed decision, a copy of the proposed decision
shall be filed by the board as a public record and a copy shall be
served by the board on each party and his or her attorney.

begin delete SEC. 13. end delete
begin insert SEC. 14. end insert   

Section 3082 is added to the Vehicle Code, to read:

3082.  

Either party may seek judicial review of final decisions
of the board. Time for filing for the review shall not be more than
45 days from the date on which the final order of the board is made
public and is delivered to the parties personally or is sent to them
by certified mail.

begin delete SEC. 14. end delete
begin insert SEC. 15. end insert   

Section 11705 of the Vehicle Code is amended to
read:

11705.  

(a) The department, after notice and hearing, may
suspend or revoke the license issued to a dealer, transporter,
manufacturer, manufacturer branch, remanufacturer,
remanufacturer branch, distributor, or distributor branch upon
determining that the person to whom the license was issued is not
lawfully entitled thereto, or has done any of the following:

(1) Filed an application for the license using a false or fictitious
name not registered with the proper authorities, or knowingly made
a false statement or knowingly concealed a material fact, in the
application for the license.

(2) Made, or knowingly or negligently permitted, an illegal use
of the special plates issued to the licensee.

(3) Used a false or fictitious name, knowingly made a false
statement, or knowingly concealed a material fact, in an application
for the registration of a vehicle, or otherwise committed a fraud
in the application.

(4) Failed to deliver to a transferee lawfully entitled thereto a
properly endorsed certificate of ownership.

(5) Knowingly purchased, sold, or otherwise acquired or
disposed of a stolen motor vehicle.

(6) Failed to provide and maintain a clear physical division
between the type of business licensed pursuant to this chapter and
any other type of business conducted at the established place of
business.

(7) Willfully violated Section 3064, 3065, 3074, or 3075 or any
rule or regulation adopted pursuant thereto.

(8) Violated any provision of Division 3 (commencing with
Section 4000) or any rule or regulation adopted pursuant thereto,
or subdivision (a) of Section 38200.

(9) Violated any provision of Division 4 (commencing with
Section 10500) or any rule or regulation adopted pursuant thereto.

(10) Violated any provision of Article 1 (commencing with
Section 11700) of Chapter 4 of Division 5 or any rule or regulation
adopted pursuant thereto.

(11) Violated any provision of Part 5 (commencing with Section
10701) of Division 2 of the Revenue and Taxation Code or any
rule or regulation adopted pursuant thereto.

(12) Violated any provision of Chapter 2b (commencing with
Section 2981) of Title 14 of Part 4 of Division 3 of the Civil Code
or any rule or regulation adopted pursuant thereto.

(13) Submitted a check, draft, or money order to the department
for any obligation or fee due the state which was dishonored or
refused payment upon presentation.

(14) Has caused any person to suffer any loss or damage by
reason of any fraud or deceit practiced on that person or fraudulent
representations made to that person in the course of the licensed
activity.

For purposes of this paragraph, “fraud” includes any act or
omission which is included within the definition of either “actual
fraud” or “constructive fraud” as defined in Sections 1572 and
1573 of the Civil Code, and “deceit” has the same meaning as
defined in Section 1710 of the Civil Code. In addition, “fraud”
and “deceit” include, but are not limited to, a misrepresentation in
any manner, whether intentionally false or due to gross negligence,
of a material fact; a promise or representation not made honestly
and in good faith; an intentional failure to disclose a material fact;
and any act within Section 484 of the Penal Code.

For purposes of this paragraph, “person” also includes a
governmental entity.

(15) Failed to meet the terms and conditions of an agreement
entered into pursuant to Section 11707.

(16) Violated Section 43151, 43152, or 43153 of, or subdivision
(b) of Section 44072.10 of, the Health and Safety Code.

(17) Failed to repay a claim paid by the Consumer Motor
Vehicle Recovery Corporation as provided in subdivision (i) of
Section 11703.

(18) As a buy-here-pay-here dealer, violated any provision of
Chapter 11 (commencing with Section 7500) of begin delete Divisions end delete begin insert Division end insert
3 of the Business and Professions Code or any rule or regulation
adopted pursuant to those provisions.

(b) Any of the causes specified in this chapter as a cause for
refusal to issue a license to a transporter, manufacturer,
manufacturer branch, remanufacturer, remanufacturer branch,
distributor, distributor branch, or dealer applicant is cause to
suspend or revoke a license issued to a transporter, manufacturer,
manufacturer branch, remanufacturer, remanufacturer branch,
distributor, distributor branch, or dealer.

(c) Except as provided in Section 11707, every hearing provided
for in this section shall be conducted pursuant to Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title
2 of the Government Code.

begin delete SEC. 15. end delete
begin insert SEC. 16. end insert   

Section 11713.1 of the Vehicle Code is amended to
read:

11713.1.  

It is a violation of this code for the holder of a dealer’s
license issued under this article to do any of the following:

(a) Advertise a specific vehicle for sale without identifying the
vehicle by its model, model-year, and either its license number or
that portion of the vehicle identification number that distinguishes
the vehicle from all other vehicles of the same make, model, and
model-year. Model-year is not required to be advertised for current
model-year vehicles. Year models are no longer current when
ensuing year models are available for purchase at retail in
California. An advertisement that offers for sale a class of new
vehicles in a dealer’s inventory, consisting of five or more vehicles,
that are all of the same make, model, and model-year is not required
to include in the advertisement the vehicle identification numbers
or license numbers of those vehicles.

(b) Advertise the total price of a vehicle without including all
costs to the purchaser at time of sale, except taxes, vehicle
registration fees, the California tire fee, as defined in Section 42885
of the Public Resources Code, emission testing charges not
exceeding fifty dollars ($50), actual fees charged for certificates
pursuant to Section 44060 of the Health and Safety Code, finance
charges, and any dealer document processing charge or charge to
electronically register or transfer the vehicle.

(c) (1) Exclude from an advertisement of a vehicle for sale that
there will be added to the advertised total price at the time of sale,
charges for sales tax, vehicle registration fees, the California tire
fee, the fee charged by the state for the issuance of a certificate of
compliance or noncompliance pursuant to a statute, finance
charges, a charge to electronically register or transfer the vehicle,
and a dealer document processing charge.

(2) The obligations imposed by paragraph (1) are satisfied by
adding to the advertisement a statement containing no abbreviations
and that is worded in substantially the following form: “Plus
government fees and taxes, any finance charges, any dealer
document processing charge, any electronic filing charge, and any
emission testing charge.”

(3) For purposes of paragraph (1), “advertisement” means an
advertisement in a newspaper, magazine, or direct mail publication
that is two or more columns in width or one column in width and
more than seven inches in length, or on a Web page of a dealer’s
Internet Web site that displays the price of a vehicle offered for
sale on the Internet, as that term is defined in paragraph (6) of
subdivision (f) of Section 17538 of the Business and Professions
Code.

(d) Represent the dealer document processing charge, electronic
registration or transfer charge, or emission testing charge, as a
governmental fee.

(e) Fail to sell a vehicle to a person at the advertised total price,
exclusive of taxes, vehicle registration fees, the California tire fee,
the fee charged by the state for the issuance of a certificate of
compliance or noncompliance pursuant to a statute, finance
charges, mobilehome escrow fees, the amount of a city, county,
or city and county imposed fee or tax for a mobilehome, a dealer
document processing charge, an electronic registration or transfer
charge, and a charge for emission testing not to exceed fifty dollars
($50) plus the actual fees charged for certificates pursuant to
Section 44060 of the Health and Safety Code, while the vehicle
remains unsold, unless the advertisement states the advertised total
price is good only for a specified time and the time has elapsed.
Advertised vehicles shall be sold at or below the advertised total
price, with statutorily permitted exclusions, regardless of whether
the purchaser has knowledge of the advertised total price.

(f) (1) Advertise for sale, sell, or purchase for resale a new
vehicle of a line-make for which the dealer does not hold a
franchise.

(2) This subdivision does not apply to a transaction involving
the following:

(A) A mobilehome.

(B) A commercial coach, as defined in Section 18001.8 of the
Health and Safety Code.

(C) An off-highway motor vehicle subject to identification as
defined in Section 38012.

(D) A manufactured home.

(E) A new vehicle that will be substantially altered or modified
by a converter prior to resale.

(F) A commercial vehicle with a gross vehicle weight rating of
more than 10,000 pounds.

(G) A vehicle purchased for export and exported outside the
territorial limits of the United States without being registered with
the department.

(H) A vehicle acquired in the ordinary course of business as a
new vehicle by a dealer franchised to sell that vehicle, if all of the
following apply:

(i) The manufacturer or distributor of the vehicle files a
bankruptcy petition.

(ii) The franchise agreement of the dealer is terminated,
canceled, or rejected by the manufacturer or distributor as part of
the bankruptcy proceedings and the termination, cancellation, or
rejection is not a result of the revocation by the department of the
dealer’s license or the dealer’s conviction of a crime.

(iii) The vehicle is held in the inventory of the dealer on the
date the bankruptcy petition is filed.

(iv) The vehicle is sold by the dealer within six months of the
date the bankruptcy petition is filed.

(3) Subparagraph (H) of paragraph (2) does not entitle a dealer
whose franchise agreement has been terminated, canceled, or
rejected to continue to perform warranty service repairs or continue
to be eligible to offer or receive consumer or dealer incentives
offered by the manufacturer or distributor.

(g) Sell a park trailer, as specified in Section 18009.3 of the
Health and Safety Code, without disclosing in writing to the
purchaser that a park trailer is required to be moved by a transporter
or a licensed manufacturer or dealer under a permit issued by the
Department of Transportation or a local authority with respect to
highways under their respective jurisdictions.

(h) Advertise free merchandise, gifts, or services provided by
a dealer contingent on the purchase of a vehicle. “Free” includes
merchandise or services offered for sale at a price less than the
seller’s cost of the merchandise or services.

(i) (1) Advertise vehicles, and related goods or services, at a
specified dealer price, with the intent not to supply reasonably
expectable demand, unless the advertisement discloses the number
of vehicles in stock at the advertised price. In addition, whether
or not there are sufficient vehicles in stock to supply a reasonably
expectable demand, when phrases such as “starting at,” “from,”
“beginning as low as,” or words of similar import are used in
reference to an advertised price, the advertisement shall disclose
the number of vehicles available at that advertised price.

(2) For purposes of this subdivision, in a newspaper
advertisement for a vehicle that is two model-years old or newer,
the actual phrase that states the number of vehicles in stock at the
advertised price shall be printed in a type size that is at least equal
to one-quarter of the type size, and in the same style and color of
type, used for the advertised price. However, in no case shall the
phrase be printed in less than 8-point type size, and the phrase
shall be disclosed immediately above, below, or beside the
advertised price without intervening words, pictures, marks, or
symbols.

(3) The disclosure required by this subdivision is in addition to
any other disclosure required by this code or any regulation
regarding identifying vehicles advertised for sale.

(j) Use “rebate” or similar words, including, but not limited to,
“cash back,” in advertising the sale of a vehicle unless the rebate
is expressed in a specific dollar amount and is in fact a rebate
offered by the vehicle manufacturer or distributor, a finance
company affiliated with a vehicle manufacturer or distributor, a
regulated utility, or a governmental entity directly to the retail
purchaser of the vehicle or to the assignee of the retail purchaser.

(k) Require a person to pay a higher price for a vehicle and
related goods or services for receiving advertised credit terms than
the cash price the same person would have to pay to purchase the
same vehicle and related goods or services. For the purpose of this
subdivision, “cash price” has the same meaning as defined in
subdivision (e) of Section 2981 of the Civil Code.

(l) Advertise a guaranteed trade-in allowance.

(m) Misrepresent the authority of a salesperson, representative,
or agent to negotiate the final terms of a transaction.

(n) (1) Use “invoice,” “dealer’s invoice,” “wholesale price,”
or similar terms that refer to a dealer’s cost for a vehicle in an
advertisement for the sale of a vehicle or advertise that the selling
price of a vehicle is above, below, or at either of the following:

(A) The manufacturer’s or distributor’s invoice price to a dealer.

(B) A dealer’s cost.

(2) This subdivision does not apply to either of the following:

(A) A communication occurring during face-to-face negotiations
for the purchase of a specific vehicle if the prospective purchaser
initiates a discussion of the vehicle’s invoice price or the dealer’s
cost for that vehicle.

(B) A communication between a dealer and a prospective
commercial purchaser that is not disseminated to the general public.
For purposes of this subparagraph, a “commercial purchaser”
means a dealer, lessor, lessor-retailer, manufacturer,
remanufacturer, distributor, financial institution, governmental
entity, or person who purchases 10 or more vehicles during a year.

(o) Violate a law prohibiting bait and switch advertising,
including, but not limited to, the guides against bait advertising
set forth in Part 238 (commencing with Section 238) of Title 16
of the Code of Federal Regulations, as those regulations read on
January 1, 1988.

(p) Make an untrue or misleading statement indicating that a
vehicle is equipped with all the factory-installed optional equipment
the manufacturer offers, including, but not limited to, a false
statement that a vehicle is “fully factory equipped.”

(q) Affix on a new vehicle a supplemental price sticker
containing a price that represents the dealer’s asking price that
exceeds the manufacturer’s suggested retail price unless all of the
following occur:

(1) The supplemental sticker clearly and conspicuously discloses
in the largest print appearing on the sticker, other than the print
size used for the dealer’s name, that the supplemental sticker price
is the dealer’s asking price, or words of similar import, and that it
is not the manufacturer’s suggested retail price.

(2) The supplemental sticker clearly and conspicuously discloses
the manufacturer’s suggested retail price.

(3) The supplemental sticker lists each item that is not included
in the manufacturer’s suggested retail price, and discloses the
additional price of each item. If the supplemental sticker price is
greater than the sum of the manufacturer’s suggested retail price
and the price of the items added by the dealer, the supplemental
sticker price shall set forth that difference and describe it as “added
mark-up.”

(r) Advertise an underselling claim, including, but not limited
to, “we have the lowest prices” or “we will beat any dealer’s price,”
unless the dealer has conducted a recent survey showing that the
dealer sells its vehicles at lower prices than another licensee in its
trade area and maintains records to adequately substantiate the
claims. The substantiating records shall be made available to the
department upon request.

(s) (1) Advertise an incentive offered by the manufacturer or
distributor if the dealer is required to contribute to the cost of the
incentive as a condition of participating in the incentive program,
unless the dealer discloses in a clear and conspicuous manner that
dealer participation may affect consumer cost.

(2) For purposes of this subdivision, “incentive” means anything
of value offered to induce people to purchase a vehicle, including,
but not limited to, discounts, savings claims, rebates, below-market
finance rates, and free merchandise or services.

(t) Display or offer for sale a used vehicle unless there is affixed
to the vehicle the Federal Trade Commission’s Buyer’s Guide as
required by Part 455 of Title 16 of the Code of Federal Regulations.

(u) Fail to disclose in writing to the franchisor of a new motor
vehicle dealer the name of the purchaser, date of sale, and the
vehicle identification number of each new motor vehicle sold of
the line-make of that franchisor, or intentionally submit to that
franchisor a false name for the purchaser or false date for the date
of sale.

(v) Enter into a contract for the retail sale of a motor vehicle
unless the contract clearly and conspicuously discloses whether
the vehicle is being sold as a new vehicle or a used vehicle, as
defined in this code.

(w) Use a simulated check, as defined in subdivision (a) of
Section 22433 of the Business and Professions Code, in an
advertisement for the sale or lease of a vehicle.

(x) Fail to disclose, in a clear and conspicuous manner in at
least 10-point boldface type on the face of a contract for the retail
sale of a new motor vehicle that this transaction is, or is not, subject
to a fee received by an autobroker from the selling new motor
vehicle dealer, and the name of the autobroker, if applicable.

(y) Sell or lease a new motor vehicle after October 1, 2012,
unless the dealer has a contractual agreement with the department
to be a private industry partner pursuant to Section 1685. This
subdivision does not apply to the sale or lease of a motorcycle or
off-highway motor vehicle subject to identification under Section
38010 or a recreational vehicle as defined in Section 18010 of the
Health and Safety Code.

(z) As used in this section, “make” and “model” have the same
meaning as is provided in Section 565.12 of Title 49 of the Code
of Federal Regulations.

begin delete SEC. 16. end delete
begin insert SEC. 17. end insert   

Section 11713.3 of the Vehicle Code is amended to
read:

11713.3.  

It is unlawful and a violation of this code for a
manufacturer, manufacturer branch, distributor, or distributor
branch licensed pursuant to this code to do, directly or indirectly
through an affiliate, any of the following:

(a) To refuse or fail to deliver in reasonable quantities and within
a reasonable time after receipt of an order from a dealer having a
franchise for the retail sale of a new vehicle sold or distributed by
the manufacturer or distributor, a new vehicle or parts or
accessories to new vehicles as are covered by the franchise, if the
vehicle, parts, or accessories are publicly advertised as being
available for delivery or actually being delivered. This subdivision
is not violated, however, if the failure is caused by acts or causes
beyond the control of the manufacturer, manufacturer branch,
distributor, or distributor branch.

(b) To prevent or require, or attempt to prevent or require, by
contract or otherwise, a change in the capital structure of a
dealership or the means by or through which the dealer finances
the operation of the dealership, if the dealer at all times meets
reasonable capital standards agreed to by the dealer and the
manufacturer or distributor, and if a change in capital structure
does not cause a change in the principal management or have the
effect of a sale of the franchise without the consent of the
manufacturer or distributor.

(c) To prevent or require, or attempt to prevent or require, a
dealer to change the executive management of a dealership, other
than the principal dealership operator or operators, if the franchise
was granted to the dealer in reliance upon the personal
qualifications of that person.

(d) (1) Except as provided in subdivision (t), to prevent or
require, or attempt to prevent or require, by contract or otherwise,
a dealer, or an officer, partner, or stockholder of a dealership, the
sale or transfer of a part of the interest of any of them to another
person. A dealer, officer, partner, or stockholder shall not, however,
have the right to sell, transfer, or assign the franchise, or a right
thereunder, without the consent of the manufacturer or distributor
except that the consent shall not be unreasonably withheld.

(2) (A) For the transferring franchisee to fail, prior to the sale,
transfer, or assignment of a franchisee or the sale, assignment, or
transfer of all, or substantially all, of the assets of the franchised
business or a controlling interest in the franchised business to
another person, to notify the manufacturer or distributor of the
franchisee’s decision to sell, transfer, or assign the franchise. The
notice shall be in writing and shall include all of the following:

(i) The proposed transferee’s name and address.

(ii) A copy of all of the agreements relating to the sale,
assignment, or transfer of the franchised business or its assets.

(iii) The proposed transferee’s application for approval to
become the successor franchisee. The application shall include
forms and related information generally utilized by the
manufacturer or distributor in reviewing prospective franchisees,
if those forms are readily made available to existing franchisees.
As soon as practicable after receipt of the proposed transferee’s
application, the manufacturer or distributor shall notify the
franchisee and the proposed transferee of information needed to
make the application complete.

(B) For the manufacturer or distributor, to fail, on or before 60
days after the receipt of all of the information required pursuant
to subparagraph (A), or as extended by a written agreement
between the manufacturer or distributor and the franchisee, to
notify the franchisee of the approval or the disapproval of the sale,
transfer, or assignment of the franchise. The notice shall be in
writing and shall be personally served or sent by certified mail,
return receipt requested, or by guaranteed overnight delivery
service that provides verification of delivery and shall be directed
to the franchisee. A proposed sale, assignment, or transfer shall
be deemed approved, unless disapproved by the franchisor in the
manner provided by this subdivision. If the proposed sale,
assignment, or transfer is disapproved, the franchisor shall include
in the notice of disapproval a statement setting forth the reasons
for the disapproval.

(3) In an action in which the manufacturer’s or distributor’s
withholding of consent under this subdivision or subdivision (e)
is an issue, whether the withholding of consent was unreasonable
is a question of fact requiring consideration of all the existing
circumstances.

(e) To prevent, or attempt to prevent, a dealer from receiving
fair and reasonable compensation for the value of the franchised
business. There shall not be a transfer or assignment of the dealer’s
franchise without the consent of the manufacturer or distributor,
which consent shall not be unreasonably withheld or conditioned
upon the release, assignment, novation, waiver, estoppel, or
modification of a claim or defense by the dealer.

(f) To obtain money, goods, services, or another benefit from
a person with whom the dealer does business, on account of, or in
relation to, the transaction between the dealer and that other person,
other than for compensation for services rendered, unless the
benefit is promptly accounted for, and transmitted to, the dealer.

(g) (1) Except as provided in paragraph (3), to obtain from a
dealer or enforce against a dealer an agreement, provision, release,
assignment, novation, waiver, or estoppel that does any of the
following:

(A) Modifies or disclaims a duty or obligation of a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative, or a right or privilege of a dealer, pursuant to
Chapter 4 (commencing with Section 11700) of Division 5 or
Chapter 6 (commencing with Section 3000) of Division 2.

(B) Limits or constrains the right of a dealer to file, pursue, or
submit evidence in connection with a protest before the board.

(C) Requires a dealer to terminate a franchise.

(D) Requires a controversy between a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative and a dealer to be referred to a person for a binding
determination. However, this subparagraph does not prohibit
arbitration before an independent arbitrator, provided that whenever
a motor vehicle franchise contract provides for the use of arbitration
to resolve a controversy arising out of, or relating to, that contract,
arbitration may be used to settle the controversy only if, after the
controversy arises, all parties to the controversy consent in writing
to use arbitration to settle the controversy. For the purpose of this
subparagraph, the terms “motor vehicle” and “motor vehicle
franchise contract” shall have the same meaning as defined in
Section 1226 of Title 15 of the United States Code. If arbitration
is elected to settle a dispute under a motor vehicle franchise
contract, the arbitrator shall provide the parties to the arbitration
with a written explanation of the factual and legal basis for the
award.

(2) An agreement, provision, release, assignment, novation,
waiver, or estoppel prohibited by this subdivision shall be
unenforceable and void.

(3) This subdivision does not do any of the following:

(A) Limit or restrict the terms upon which parties to a protest
before the board, civil action, or other proceeding can settle or
resolve, or stipulate to evidentiary or procedural matters during
the course of, a protest, civil action, or other proceeding.

(B) Affect the enforceability of any stipulated order or other
order entered by the board.

(C) Affect the enforceability of any provision in a contract if
the provision is not prohibited under this subdivision or any other
law.

(D) Affect the enforceability of a provision in any contract
entered into on or before December 31, 2011.

(E) Prohibit a dealer from waiving its right to file a protest
pursuant to Section 3065.1 if the waiver agreement is entered into
after a franchisor incentive program claim has been disapproved
by the franchisor and the waiver is voluntarily given as part of an
agreement to settle that claim.

(F) Prohibit a voluntary agreement supported by valuable
consideration, other than granting or renewing a franchise, that
does both of the following:

(i) Provides that a dealer establish or maintain exclusive
facilities, personnel, or display space or provides that a dealer
make a material alteration, expansion, or addition to a dealership
facility.

(ii) Contains no waiver or other provision prohibited by
subparagraph (A), (B), (C), or (D) of paragraph (1).

(G) Prohibit an agreement separate from the franchise agreement
that implements a dealer’s election to terminate the franchise if
the agreement is conditioned only on a specified time for
termination or payment of consideration to the dealer.

(H) (i) Prohibit a voluntary waiver agreement, supported by
valuable consideration, other than the consideration of renewing
a franchise, to waive the right of a dealer to file a protest under
Section 3062 for the proposed establishment or relocation of a
specific proposed dealership, if the waiver agreement provides all
of the following:

(I) The approximate address at which the proposed dealership
will be located.

(II) The planning potential used to establish the proposed
dealership’s facility, personnel, and capital requirements.

(III) An approximation of projected vehicle and parts sales, and
number of vehicles to be serviced at the proposed dealership.

(IV) Whether the franchisor or affiliate will hold an ownership
interest in the proposed dealership or real property of the proposed
dealership, and the approximate percentage of any franchisor or
affiliate ownership interest in the proposed dealership.

(V) The line-makes to be operated at the proposed dealership.

(VI) If known at the time the waiver agreement is executed, the
identity of the dealer who will operate the proposed dealership.

(VII) The date the waiver agreement is to expire, which may
not be more than 30 months after the date of execution of the
waiver agreement.

(ii) Notwithstanding the provisions of a waiver agreement
entered into pursuant to the provisions of this subparagraph, a
dealer may file a protest under Section 3062 if any of the
information provided pursuant to clause (i) has become materially
inaccurate since the waiver agreement was executed. Any
determination of the enforceability of a waiver agreement shall be
determined by the board and the franchisor shall have the burden
of proof.

(h) To increase prices of motor vehicles that the dealer had
ordered for private retail consumers prior to the dealer’s receipt
of the written official price increase notification. A sales contract
signed by a private retail consumer is evidence of the order. In the
event of manufacturer price reductions, the amount of the reduction
received by a dealer shall be passed on to the private retail
consumer by the dealer if the retail price was negotiated on the
basis of the previous higher price to the dealer. Price reductions
apply to all vehicles in the dealer’s inventory that were subject to
the price reduction. Price differences applicable to new model or
series motor vehicles at the time of the introduction of new models
or series shall not be considered a price increase or price decrease.
This subdivision does not apply to price changes caused by either
of the following:

(1) The addition to a motor vehicle of required or optional
equipment pursuant to state or federal law.

(2) Revaluation of the United States dollar in the case of a
foreign-make vehicle.

(i) To fail to pay to a dealer, within a reasonable time following
receipt of a valid claim by a dealer thereof, a payment agreed to
be made by the manufacturer or distributor to the dealer by reason
of the fact that a new vehicle of a prior year model is in the dealer’s
inventory at the time of introduction of new model vehicles.

(j) To deny the widow, widower, or heirs designated by a
deceased owner of a dealership the opportunity to participate in
the ownership of the dealership or successor dealership under a
valid franchise for a reasonable time after the death of the owner.

(k) To offer refunds or other types of inducements to a person
for the purchase of new motor vehicles of a certain line-make to
be sold to the state or a political subdivision of the state without
making the same offer to all other dealers in the same line-make
within the relevant market area.

(l) To modify, replace, enter into, relocate, terminate, or refuse
to renew a franchise in violation of Article 4 (commencing with
Section 3060) or Article 5 (commencing with Section 3070) of
Chapter 6 of Division 2.

(m) To employ a person as a representative who has not been
licensed pursuant to Article 3 (commencing with Section 11900)
of Chapter 4 of Division 5.

(n) To deny a dealer the right of free association with another
dealer for a lawful purpose.

(o) (1) To compete with a dealer in the same line-make
operating under an agreement or franchise from a manufacturer
or distributor in the relevant market area.

(2) A manufacturer, branch, or begin delete distributor end delete begin insert distributor, end insert or an
entity that begin delete controls end delete begin insert controls, end insert or is controlled by, a manufacturer,
branch, or distributor, shall not, however, be deemed to be
competing in the following limited circumstances:

(A) Owning or operating a dealership for a temporary period,
not to exceed one year at the location of a former dealership of the
same line-make that has been out of operation for less than six
months. However, after a showing of good cause by a
manufacturer, branch, or distributor that it needs additional time
to operate a dealership in preparation for sale to a successor
independent franchisee, the board may extend the time period.

(B) Owning an interest in a dealer as part of a bona fide dealer
development program that satisfies all of the following
requirements:

(i) The sole purpose of the program is to make franchises
available to persons lacking capital, training, business experience,
or other qualities ordinarily required of prospective franchisees
and the dealer development candidate is an individual who is
unable to acquire the franchise without assistance of the program.

(ii) The dealer development candidate has made a significant
investment subject to loss in the franchised business of the dealer.

(iii) The program requires the dealer development candidate to
manage the day-to-day operations and business affairs of the dealer
and to acquire, within a reasonable time and on reasonable terms
and conditions, beneficial ownership and control of a majority
interest in the dealer and disassociation of any direct or indirect
ownership or control by the manufacturer, branch, or distributor.

(C) Owning a wholly owned subsidiary corporation of a
distributor that sells motor vehicles at retail, if, for at least three
years prior to January 1, 1973, the subsidiary corporation has been
a wholly owned subsidiary of the distributor and engaged in the
sale of vehicles at retail.

(3) (A) A manufacturer, branch, and distributor that owns or
operates a dealership in the manner described in subparagraph (A)
of paragraph (2) shall give written notice to the board, within 10
days, each time it commences or terminates operation of a
dealership and each time it acquires, changes, or divests itself of
an ownership interest.

(B) A manufacturer, branch, and distributor that owns an interest
in a dealer in the manner described in subparagraph (B) of
paragraph (2) shall give written notice to the board, annually, of
the name and location of each dealer in which it has an ownership
interest, the name of the bona fide dealer development owner or
owners, and the ownership interests of each owner expressed as a
percentage.

(p) To unfairly discriminate among its franchisees with respect
to warranty reimbursement or authority granted to its franchisees
to make warranty adjustments with retail customers.

(q) To sell vehicles to a person not licensed pursuant to this
chapter for resale.

(r) To fail to affix an identification number to a park trailer, as
described in Section 18009.3 of the Health and Safety Code, that
is manufactured on or after January 1, 1987, and that does not
clearly identify the unit as a park trailer to the department. The
configuration of the identification number shall be approved by
the department.

(s) To dishonor a warranty, rebate, or other incentive offered
to the public or a dealer in connection with the retail sale of a new
motor vehicle, based solely upon the fact that an autobroker
arranged or negotiated the sale. This subdivision shall not prohibit
the disallowance of that rebate or incentive if the purchaser or
dealer is ineligible to receive the rebate or incentive pursuant to
any other term or condition of a rebate or incentive program.

(t) To exercise a right of first refusal or other right requiring a
franchisee or an owner of the franchise to sell, transfer, or assign
to the franchisor, or to a nominee of the franchisor, all or a material
part of the franchised business or of the assets of the franchised
business unless all of the following requirements are met:

(1) The franchise authorizes the franchisor to exercise a right
of first refusal to acquire the franchised business or assets of the
franchised business in the event of a proposed sale, transfer, or
assignment.

(2) The franchisor gives written notice of its exercise of the
right of first refusal no later than 45 days after the franchisor
receives all of the information required pursuant to subparagraph
(A) of paragraph (2) of subdivision (d).

(3) The sale, transfer, or assignment being proposed relates to
not less than all or substantially all of the assets of the franchised
business or to a controlling interest in the franchised business.

(4) The proposed transferee is neither a family member of an
owner of the franchised business, nor a managerial employee of
the franchisee owning 15 percent or more of the franchised
business, nor a corporation, partnership, or other legal entity owned
by the existing owners of the franchised business. For purposes of
this paragraph, a “family member” means the spouse of an owner
of the franchised business, the child, grandchild, brother, sister,
or parent of an owner, or a spouse of one of those family members.
This paragraph does not limit the rights of the franchisor to
disapprove a proposed transferee as provided in subdivision (d).

(5) Upon the franchisor’s exercise of the right of first refusal,
the consideration paid by the franchisor to the franchisee and
owners of the franchised business shall equal or exceed all
consideration that each of them were to have received under the
terms of, or in connection with, the proposed sale, assignment, or
transfer, and the franchisor shall comply with all the terms and
conditions of the agreement or agreements to sell, transfer, or
assign the franchised business.

(6) The franchisor shall reimburse the proposed transferee for
expenses paid or incurred by the proposed transferee in evaluating,
investigating, and negotiating the proposed transfer to the extent
those expenses do not exceed the usual, customary, and reasonable
fees charged for similar work done in the area in which the
franchised business is located. These expenses include, but are not
limited to, legal and accounting expenses, and expenses incurred
for title reports and environmental or other investigations of real
property on which the franchisee’s operations are conducted. The
proposed transferee shall provide the franchisor a written
itemization of those expenses, and a copy of all nonprivileged
reports and studies for which expenses were incurred, if any, within
30 days of the proposed transferee’s receipt of a written request
from the franchisor for that accounting. The franchisor shall make
payment within 30 days of exercising the right of first refusal.

(u) (1) To unfairly discriminate in favor of a dealership owned
or controlled, in whole or in part, by a manufacturer or distributor
or an entity that controls or is controlled by the manufacturer or
distributor. Unfair discrimination includes, but is not limited to,
the following:

(A) The furnishing to a franchisee or dealer that is owned or
controlled, in whole or in part, by a manufacturer, branch, or
distributor of any of the following:

(i) A vehicle that is not made available to each franchisee
pursuant to a reasonable allocation formula that is applied
uniformly, and a part or accessory that is not made available to all
franchisees on an equal basis when there is no reasonable allocation
formula that is applied uniformly.

(ii) A vehicle, part, or accessory that is not made available to
each franchisee on comparable delivery terms, including the time
of delivery after the placement of an order. Differences in delivery
terms due to geographic distances or other factors beyond the
control of the manufacturer, branch, or distributor shall not
constitute unfair competition.

(iii) Information obtained from a franchisee by the manufacturer,
branch, or distributor concerning the business affairs or operations
of a franchisee in which the manufacturer, branch, or distributor
does not have an ownership interest. The information includes,
but is not limited to, information contained in financial statements
and operating reports, the name, address, or other personal
information or buying, leasing, or service behavior of a dealer
customer, and other information that, if provided to a franchisee
or dealer owned or controlled by a manufacturer or distributor,
would give that franchisee or dealer a competitive advantage. This
clause does not apply if the information is provided pursuant to a
subpoena or court order, or to aggregated information made
available to all franchisees.

(iv) Sales or service incentives, discounts, or promotional
programs that are not made available to all California franchises
of the same line-make on an equal basis.

(B) Referring a prospective purchaser or lessee to a dealer in
which a manufacturer, branch, or distributor has an ownership
interest, unless the prospective purchaser or lessee resides in the
area of responsibility assigned to that dealer or the prospective
purchaser or lessee requests to be referred to that dealer.

(2) This subdivision does not prohibit a franchisor from granting
a franchise to prospective franchisees or assisting those franchisees
during the course of the franchise relationship as part of a program
or programs to make franchises available to persons lacking capital,
training, business experience, or other qualifications ordinarily
required of prospective franchisees.

(v) (1) To access, modify, or extract information from a
confidential dealer computer record, as defined in Section
11713.25, without obtaining the prior written consent of the dealer
and without maintaining administrative, technical, and physical
safeguards to protect the security, confidentiality, and integrity of
the information.

(2) Paragraph (1) does not limit a duty that a dealer may have
to safeguard the security and privacy of records maintained by the
dealer.

(w) (1) To use electronic, contractual, or other means to prevent
or interfere with any of the following:

(A) The lawful efforts of a dealer to comply with federal and
state data security and privacy laws.

(B) The ability of a dealer to do either of the following:

(i) Ensure that specific data accessed from the dealer’s computer
system is within the scope of consent specified in subdivision (v).

(ii) Monitor specific data accessed from or written to the dealer’s
computer system.

(2) Paragraph (1) does not limit a duty that a dealer may have
to safeguard the security and privacy of records maintained by the
dealer.

(x) (1) To unfairly discriminate against a franchisee selling a
service contract, debt cancellation agreement, maintenance
agreement, or similar product not approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate. For purposes of this subdivision,
unfair discrimination includes, but is not limited to, any of the
following:

(A) Express or implied statements that the dealer is under an
obligation to exclusively sell or offer to sell service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(B) Express or implied statements that selling or offering to sell
service contracts, debt cancellation agreements, maintenance
agreements, or similar products not approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate, or the failure to sell or offer to
sell service contracts, debt cancellation agreements, maintenance
agreements, or similar products approved, endorsed, sponsored,
or offered by the manufacturer, manufacturer branch, distributor,
or distributor branch or affiliate will have any negative
consequences for the dealer.

(C) Measuring a dealer’s performance under a franchise
agreement based upon the sale of service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(D) Requiring a dealer to actively promote the sale of service
contracts, debt cancellation agreements, or similar products
approved, endorsed, sponsored, or offered by the manufacturer,
manufacturer branch, distributor, or distributor branch or affiliate.

(E) Conditioning access to vehicles or parts, or vehicle sales or
service incentives upon the sale of service contracts, debt
cancellation agreements, or similar products approved, endorsed,
sponsored, or offered by the manufacturer, manufacturer branch,
distributor, or distributor branch or affiliate.

(2) Unfair discrimination does not include, and nothing shall
prohibit a manufacturer from, offering an incentive program to
vehicle dealers who voluntarily sell or offer to sell service
contracts, debt cancellation agreements, or similar products
approved, endorsed, sponsored, or offered by the manufacturer,
manufacturer branch, distributor, or distributor branch or affiliate,
if the program does not provide vehicle sales or service incentives.

(3) This subdivision does not prohibit a manufacturer,
manufacturer branch, distributor, or distributor branch from
requiring a franchisee that sells a used vehicle as “certified” under
a certified used vehicle program established by the manufacturer,
manufacturer branch, distributor, or distributor branch to provide
a service contract approved, endorsed, sponsored, or offered by
the manufacturer, manufacturer branch, distributor, or distributor
branch.

(4) Unfair discrimination does not include, and nothing shall
prohibit a franchisor from requiring a franchisee to provide, the
following notice prior to the sale of the service contract if the
service contract is not provided or backed by the franchisor and
the vehicle is of the franchised line-make:

“Service Contract Disclosure
The service contract you are purchasing is not provided or backed
by the manufacturer of the vehicle you are purchasing. The
manufacturer of the vehicle is not responsible for claims or repairs
under this service contract.
_____________________
Signature of Purchaser”

(y) To take or threaten to take any adverse action against a dealer
pursuant to an export or sale-for-resale prohibition because the
dealer sold or leased a vehicle to a customer who either exported
the vehicle to a foreign country or resold the vehicle in violation
of the prohibition, unless the export or sale-for-resale prohibition
policy was provided to the dealer in writing prior to the sale or
lease, and the dealer knew or reasonably should have known of
the customer’s intent to export or resell the vehicle in violation of
the prohibition at the time of sale or lease. If the dealer causes the
vehicle to be registered in this or any other state, and collects or
causes to be collected any applicable sales or use tax due to this
state, a rebuttable presumption is established that the dealer did
not have reason to know of the customer’s intent to export or resell
the vehicle.

(z) As used in this section, “area of responsibility” is a
geographic area specified in a franchise that is used by the
franchisor for the purpose of evaluating the franchisee’s
performance of its sales and service obligations.

begin delete SEC. 17. end delete
begin insert SEC. 18. end insert   

Section 11713.23 of the Vehicle Code is amended to
read:

11713.23.  

(a) A recreational vehicle manufacturer,
manufacturer branch, distributor, or distributor branch licensed
under this code shall not sell a new recreational vehicle in this
state to or through a recreational vehicle dealer without having
first entered into a written recreational vehicle franchise with that
recreational vehicle dealer, that complies with the requirements
of Section 331.3 and that has been signed by both parties.

(b) A recreational vehicle dealer shall not sell a new recreational
vehicle in this state without having first entered into a written
recreational vehicle franchise, that complies with the requirements
of Section 331.3, with a recreational vehicle manufacturer,
manufacturer branch, distributor, or distributor branch licensed
under this code, that has been signed by both parties.

(c) (1) A recreational vehicle manufacturer, manufacturer
branch, distributor, or distributor branch shall not ship a new
recreational vehicle to a recreational dealer on or after January 1,
2009, without a recreational vehicle franchise that has been signed
by both parties.

(2) A recreational vehicle dealer shall not receive a new
recreational vehicle from a recreational vehicle manufacturer,
manufacturer branch, distributor, or distributor branch on or after
January 1, 2009, without a recreational vehicle franchise that has
been signed by both parties.

(d) Any new recreational vehicle inventory that has been
purchased by a recreational vehicle dealer, or shipped by a
manufacturer, manufacturer branch, distributor, or distributor
branch, before January 1, 2009, may be sold at any time without
a recreational vehicle franchise.

(e) Following the termination, cancellation, or nonrenewal of
a recreational vehicle franchise, any new recreational vehicle
inventory that was purchased by the recreational vehicle dealer,
or shipped by a manufacturer, manufacturer branch, distributor,
or distributor branch, during the period that the written recreational
vehicle franchise was in effect, may be sold by that recreational
vehicle dealer at any time.

(f) This section applies only to a dealer and manufacturer
agreement involving recreational vehicles, as defined in subdivision
(a) of Section 18010 of the Health and Safety Code, but does not
include an agreement with a dealer who deals exclusively in truck
campers.

begin delete SEC. 18. end delete
begin insert SEC. 19. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.