A BILL TO BE ENTITLED
AN ACT To clarify the motor vehicle dealer franchise laws.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 20‑286(10) reads as rewritten:
"§ 20‑286.  Definitions.
The following definitions apply in this Article:
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(10)	Motor vehicle. – Any motor propelled vehicle, trailer or semi trailer, required to be registered under the laws of this State.
a.	"New motor vehicle" means a motor vehicle which has either:
1.	Never been the subject of a sale other than between new motor vehicle dealers, or between manufacturer and dealer of the same franchise; or
2.	Whose odometer mileage is 1,000 miles or less.For purposes of this Article, a motor vehicle that has previously been the subject of a sale, whether the sale was conditional or unconditional, whether or not documents transferring title to the vehicle were executed and submitted to the Division, or whether or not the title to the vehicle was transferred, may nonetheless be considered new and represented and sold by a new motor vehicle dealer to the public as such, as long as the vehicle's odometer mileage does not exceed 1,000 miles. 
b.	"Used motor vehicle" means a motor vehicle other than described in paragraph (10)a above."
SECTION 2.   G.S. 20‑286(13b) reads as rewritten:
"§ 20‑286.  Definitions.
The following definitions apply in this Article:
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(13b)	Relevant market area or trade area. – The area within a radius of 20 miles around an existing dealer or the area of responsibility defined in the franchise, whichever is greater; except that, where a manufacturer is seeking to establish an additional new motor vehicle dealer the relevant market area shall be as follows:
a.	If the population in an area within a radius of 10 miles around the proposed site is 250,000 or more, the relevant market area shall be that area within the 10 mile radius, together with the area of responsibility defined in the franchise of any existing same line-make dealer whose area of responsibility wholly or partially falls within the 10 mile radius; or
b.	If the population in an area within a radius of 10 miles around the proposed site is less than 250,000, but the population in an area within a radius of 15 miles around the proposed site is 150,000 or more, the relevant market area shall be that area within the 15 mile radius, together with the area of responsibility defined in the franchise of any existing same line-make dealer whose area of responsibility wholly or partially falls within the 15 mile radius; or
c.	Except as defined in subparts a. and b., the relevant market area shall be the area within a radius of 20 miles around an existing dealer, together with the area of responsibility defined in the franchise of any existing same line-make dealer whose area of responsibility wholly or partially falls within the 20 mile radius;
	In determining population for this definition the most recent census by the U.S. Bureau of the Census or the most recent population update either from Claritas Inc. or other similar recognized source shall be accumulated for all census tracts either wholly or partially within the relevant market area. In accumulating population for this definition, block group and block level data shall be used to apportion the population of census tracts which are only partially within the relevant market area so that population outside of the applicable radius is not included in the count."
SECTION 3.  Article 12 of Chapter 20 is amended by adding a new section to read:
"§ 20-293. Supplemental temporary license for sale of antique and specialty vehicles.
Any dealer license as a motor vehicle dealer under this Article may apply to the Commissioner and receive, at no additional charge, a supplemental temporary license authorizing the off-premises sales of antique motor vehicles and specialty motor vehicles for a period not to exceed 10 consecutive calendar days. To obtain a temporary supplemental license for the off-premises sale of antique motor vehicles and specialty motor vehicles the applicant shall: 
(1)	Be licensed as a motor vehicle dealer under this Article.
(2)	Notify the applicable local office of the Division of the specific dates and location for which the license is requested.
(3)	Display a sign at the licensed location clearly identifying the dealer.
(4)	Keep and maintain the records required for the sale of motor vehicles under this Article.
(5)	Provide staff to work at the temporary location for the duration of the off-premises sale.
(6)	Meet any local government permitting requirements.
(7)	Have written permission from the property owner to sell at the location.
For purposes of this section, the term 'antique motor vehicle' shall mean any motor vehicle for private use manufactured at least 25 years prior to the current model year, and the term 'specialty motor vehicle' shall mean any mode or series of motor vehicle for private use manufactured at least three years prior to the current model year of which no more than 5,000 vehicles were sold within the United States during the model year the vehicle was manufactured. 
This section does not apply to a nonselling motor vehicle show or public display of new motor vehicles."
SECTION 4.  G.S. 20‑305(5) reads as rewritten:
"§ 20‑305.  Coercing dealer to accept commodities not ordered; threatening to cancel franchise; preventing transfer of ownership; granting additional franchises; terminating franchises without good cause; preventing family succession.
It shall be unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative whatsoever of any of them:
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(5)	To enter into a franchise establishing an additional new motor vehicle dealer or relocating an existing new motor vehicle dealer into a relevant market area where the same line make is then represented without first notifying in writing the Commissioner and each new motor vehicle dealer in that line make in the relevant market area of the intention to establish an additional dealer or to relocate an existing dealer within or into that market area. Within 30 days of receiving such notice or within 30 days after the end of any appeal procedure provided by the manufacturer, any new motor vehicle dealer may file with the Commissioner a protest to the establishing or relocating of the new motor vehicle dealer. When a protest is filed, the Commissioner shall promptly inform the manufacturer that a timely protest has been filed, and that the manufacturer shall not establish or relocate the proposed new motor vehicle dealer until the Commissioner has held a hearing and has determined that there is good cause for permitting the addition or relocation of such new motor vehicle dealer.
a.	This section does not apply:
1.	To the relocation of an existing new motor vehicle dealer within that dealer's relevant market area, provided that the relocation not be at a site within 10 miles of a licensed new motor vehicle dealer for the same line make of motor vehicle. If this sub‑subdivision is applicable, only dealers trading in the same line‑make of vehicle that are located within the 10‑mile radius shall be entitled to notice from the manufacturer and have the protest rights afforded under this section; or
2.	If the proposed additional new motor vehicle dealer is to be established at or within two miles of a location at which a former licensed new motor vehicle dealer for the same line make of new motor vehicle had ceased operating within the previous two years;
3.	To the relocation of an existing new motor vehicle dealer within two miles of the existing site of the new motor vehicle dealership if the line make has been operating on a regular basis from the existing site for a minimum of three years immediately preceding the relocation and the relocation not be at a site within five miles of another licensed new motor vehicle dealer for the same line make of motor vehicle; or
4.	To the relocation of an existing new motor vehicle dealer if the proposed site of the relocated new motor vehicle dealership is further away from all other new motor vehicle dealers of the same line make in that relevant market area; or
5.	To the relocation of an existing new motor vehicle dealer within four miles of the existing site of the new motor vehicle dealership if the line make has been operating on a regular basis from the existing site for a minimum of 50 years immediately preceding the relocation and the relocation not be at a site within 4.5 miles of another licensed new motor vehicle dealer for the same line make of motor vehicle.
b.	In determining whether good cause has been established for not entering into or relocating an additional new motor vehicle dealer for the same line make, the Commissioner shall take into consideration the existing circumstances, including, but not limited to:
1.	The permanency of the investment of both the existing and proposed additional new motor vehicle dealers;
2.	Growth or decline in population, density of population, and new car registrations in the relevant market area;
3.	Effect on the consuming public in the relevant market area;
4.	Whether it is injurious or beneficial to the public welfare for an additional new motor vehicle dealer to be established;
5.	Whether the new motor vehicle dealers of the same line make in that relevant market area are providing adequate competition and convenient customer care for the motor vehicles of the same line make in the market area which shall include the adequacy of motor vehicle sales and service facilities, equipment, supply of motor vehicle parts, and qualified service personnel;
6.	Whether the establishment of an additional new motor vehicle dealer or relocation of an existing new motor vehicle dealer in the relevant market area would increase competition in a manner such as to be in the long‑term public interest; 
7.	The effect on the relocating dealer of a denial of its relocation into the relevant market area; and
8.	Whether an existing dealer in whose market the proposed additional new motor vehicle dealer would be established, has, at the request, encouragement, or with the approval of the franchiser: (i) acquired property for the construction or replacement facility; (ii) constructed a replacement facility; (iii) renovated, remodeled, or constructed an addition to an existing facility; or (iv) by any other means increased the dealer's investment in facilities for the purpose of improving the representation of the manufacturer's products or better serving the consuming public.
c.	The Commissioner shall try to conduct the hearing and render his final determination if possible, within 180 days after a protest is filed.
d.	Any parties to a hearing by the Commissioner concerning the establishment or relocating of a new motor vehicle dealer shall have a right of review of the decision in a court of competent jurisdiction pursuant to Chapter 150B of the General Statutes.
e.	In a hearing involving a proposed additional dealership, the manufacturer or distributor has the burden of proof under this section. In a proceeding involving the relocation of an existing dealership, the dealer seeking to relocate has the burden of proof under this section.
f.	If the Commissioner determines, following a hearing, that good cause exists for permitting the proposed additional or relocated motor vehicle dealership, the dealer seeking the proposed additional or relocated motor vehicle dealership must, within two years, obtain a license from the Commissioner for the sale of vehicles at the relevant site, and actually commence operations at the site selling new motor vehicles of all line makes, as permitted by the Commissioner. Failure to obtain a permit and commence sales within two years shall constitute waiver by the dealer of the dealer's right to the additional or relocated dealership, requiring renotification, a new hearing, and a new determination as provided in this section. If the Commissioner fails to determine that good cause exists for permitting the proposed additional or relocated motor vehicle dealership, the manufacturer seeking the proposed additional dealership or dealer seeking to relocate may not again provide notice of its intention or otherwise attempt to establish an additional dealership or relocate to any location within 10 miles of the site of the original proposed additional dealership or relocation site for a minimum of three years from the date of the Commissioner's determination.
g.	For purposes of this subdivision, the addition, creation, or operation of a "satellite" or other facility, not physically part of or contiguous to an existing licensed new motor vehicle dealer, whether or not owned or operated by a person or other entity holding a franchise as defined by G.S. 20‑286(8a), at which warranty service work authorized or reimbursed by a manufacturer is performed or at which new motor vehicles are offered for sale to the public, shall be considered an additional new motor vehicle dealer requiring a showing of good cause, prior notification to existing new motor vehicle dealers of the same line make of vehicle within the relevant market area by the manufacturer and the opportunity for a hearing before the Commissioner as provided in this subdivision.
h.	Notwithstanding the terms of any contract or agreement, and not waiving or excusing the obligation of a manufacturer to provide timely notice of termination as provided in this subdivision, the announced decision or determination of the manufacturer to discontinue or phase out a product line in its entirety or to discontinue or phase out any portion for a product line substantial enough that the discontinued or scaled down franchise held by its franchisees would either have no significant long-term value or be unmarketable, shall constitute a termination of the franchise under this subdivision effective as of the date the decision or determination is communicated by the manufacturer to its franchisees or otherwise becomes public knowledge."
SECTION 5.  G.S. 20‑305(38) reads as rewritten:
"§ 20‑305.  Coercing dealer to accept commodities not ordered; threatening to cancel franchise; preventing transfer of ownership; granting additional franchises; terminating franchises without good cause; preventing family succession.
It shall be unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative whatsoever of any of them:
	…
(38)	Notwithstanding the terms, provisions, or conditions of any agreement, franchise, novation, waiver, or other written instrument, to assign or change a franchised new motor vehicle dealer's area of responsibility under the franchise arbitrarily or without due regard to the present or projected future pattern of motor vehicle sales and registrations within the dealer's market, and without first having provided the affected dealer with prior notice of the proposed change in the dealer's area of responsibility and a detailed description of the change in writing by registered or certified mail, return receipt requested. Unless and until the Commissioner has, pursuant to G.S. 20-305(5), determined that good cause exists for the establishment of an additional dealer at a location such that there would be one or more existing dealers trading in the same line make of motor vehicle within the additional dealer's relevant market area, it shall be unlawful for a manufacturer, factory branch, distributor, or distributor branch to change any existing dealer's area of responsibility for the purpose of justifying the establishment of an additional dealer. A franchised new motor vehicle dealer who believes that a manufacturer, factory branch, distributor, or distributor branch with whom the dealer has entered into a franchise has violated this subdivision may file a petition before the Commissioner as provided in G.S. 20‑301(b) contesting the franchised new motor vehicle dealer's assigned area of responsibility. Upon the filing of a petition, the manufacturer shall not change, put into effect, use, or rely on those portions of the petitioning dealer's area of responsibility contested by the dealer, until after a hearing has been held and a determination rendered on the merits of the petition by the Commissioner. At the hearing before the Commissioner, the affected manufacturer, factory branch, distributor, or distributor branch shall have the burden of proving that all portions of its current or proposed area of responsibility for the petitioning franchised new motor vehicle dealer are reasonable in light of the present or projected future pattern of motor vehicle sales and registrations within the franchised new motor vehicle dealer's market. If a protest is or has been filed under G.S. 20‑305(5) and the franchised new motor vehicle dealer's area of responsibility is included in the relevant market area under the protest, any protest filed under this subdivision shall be consolidated with that protest for hearing and joint disposition of all of the protests."
SECTION 6.  G.S. 20‑305(39) reads as rewritten:
"§ 20‑305.  Coercing dealer to accept commodities not ordered; threatening to cancel franchise; preventing transfer of ownership; granting additional franchises; terminating franchises without good cause; preventing family succession.
It shall be unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative whatsoever of any of them:
…
(39)	Notwithstanding the terms, provisions, or conditions of any agreement, franchise, novation, waiver, or other written instrument, to require, coerce, or attempt to coerce any of its franchised motor vehicle dealers in this State to purchase or lease one or more signs displaying the name of the manufacturer or franchised motor vehicle dealer upon unreasonable or onerous terms or conditions or if installation of the additional signage would violate local signage or zoning laws to which the franchised motor vehicle dealer is subject. Any term, provision, or condition of any agreement, franchise, waiver, novation, or any other written instrument which is in violation of this subdivision shall be deemed null and void and without force and effect."
SECTION 7.  G.S. 20‑305 is amended by adding a new subdivision to read:
"§ 20‑305.  Coercing dealer to accept commodities not ordered; threatening to cancel franchise; preventing transfer of ownership; granting additional franchises; terminating franchises without good cause; preventing family succession.
It shall be unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative whatsoever of any of them:
	…
(40)	Notwithstanding the terms, provision, or conditions of any agreement or franchise or other terms or provisions of any novation, waiver, or other written instrument, to require, coerce, or attempt to coerce any dealer to floor plan any of the dealer's inventory, finance the sale or lease of any motor vehicles purchased or leased by any of the dealer's customers, or finance the acquisition, construction, or renovation of any of the dealer's property or facilities, by or through any financial source or sources designated by the manufacturer, factory branch, distributor, or distributor branch, including but not limited to any financial source or sources that is or are directly, or indirectly, owned, operated, or controlled by the manufacturer, factory branch, distributor, or distributor branch."
SECTION 8.  G.S. 20‑305.1(b1) reads as rewritten:
"(b1)	All claims made by motor vehicle dealers pursuant to this section for compensation for delivery, preparation, warranty and recall work including labor, parts, and other expenses, shall be paid by the manufacturer within 30 days after receipt of claim from the dealer. When any claim is disapproved, the dealer shall be notified in writing of the grounds for disapproval. Any claim not specifically disapproved in writing within 30 days after receipt shall be considered approved and payment is due immediately. No claim which has been approved and paid may be charged back to the dealer unless it can be shown that the claim was false or fraudulent, that the repairs were not properly made or were unnecessary to correct the defective condition, or the dealer failed to reasonably substantiate the claim. A manufacturer or distributor shall not deny a claim or reduce the amount to be reimbursed to the dealer as long as the dealer has provided reasonably sufficient documentation that the dealer:
(1)	Made a good faith attempt to perform the work in compliance with the written policies and procedures of the manufacturer; and
(2)	Actually performed the work.
A manufacturer may further not charge a dealer back subsequent to the payment of the claim unless a representative of the manufacturer has met in person at the dealership with an officer or employee of the dealer designated by the dealer and explained in detail the basis for each of the proposed charge backs and thereafter given the dealer's representative a reasonable opportunity at the meeting to explain the dealer's position relating to each of the proposed charge backs. In the event the dealer was selected for audit or review on the basis that some or all of the dealer's claims were viewed as excessive in comparison to average, mean, or aggregate data accumulated by the manufacturer, or in relation to the claims submitted by a group of other franchisees of the manufacturer, the manufacturer shall, at or prior to the meeting with the dealer's representative, provide the dealer with a written statement containing:
(1)	All grounds upon which the dealer was selected for audit or review.
(2)	The average, mean, or aggregate data upon which the dealer was selected for audit or review and a comparison of that data with relevant data from the dealer.
(3)	The name and location of all dealers comprising any group of dealers against whom the dealer's claims were compared in selecting the dealer for audit or review."
SECTION 9. If any provision of this act or its application is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provisions or application, and to this end the provisions of this act are severable.
SECTION 10.  This act is effective when it becomes law.