THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY TOMLINSON, ERICKSON, BAKER, BOSCOLA, RAFFERTY, KASUNIC, M. WHITE, ORIE, PIPPY, WOZNIAK, GREENLEAF, WASHINGTON, MELLOW, LOGAN, FERLO, WARD, DINNIMAN, FONTANA, ALLOWAY, STOUT AND STACK, JUNE 4, 2009

SENATOR TOMLINSON, CONSUMER PROTECTION AND PROFESSIONAL LICENSURE, AS AMENDED, JUNE 9, 2009   

AN ACT

Amending the act of December 22, 1983 (P.L.306, No.84), entitled

"An act providing for the State Board of Vehicle

Manufacturers, Dealers and Salespersons; and providing

penalties," providing for the definitions of "dual" or

"dualing" and "line-make"; further providing for mediation

and arbitration, for unlawful acts by manufacturers or

distributors and for manufacturer or distributor repurchase

of inventory and equipment.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 2 of the act of December 22, 1983

(P.L.306, No.84), known as the Board of Vehicles Act, is amended

by adding definitions to read:

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Dual" or "dualing."  A new vehicle dealership having two or

more line-makes of new vehicles located in the same dealership

facilities.

* * *

"Line-make."  Groups of vehicles that are offered for sale,

lease or distribution under a common name, trademark, service

mark or brand name of the manufacturer or distributor of those

same vehicles.

* * *

Section 2.  Section 11 of the act, added April 19, 1996

(P.L.104, No.27), is amended to read:

Section 11.  Mediation and arbitration.

(a)  Mediation of disputes between licensees.--

(1)  A dealer or distributor may not file a complaint,

petition or protest or bring an action in a court of

competent jurisdiction against a manufacturer or distributor

based on an alleged violation of this act or in a protest

action under this act regarding an establishment, relocation

or termination of a franchise agreement unless the dealer or

distributor serves a demand for mediation upon the

manufacturer or distributor before or contemporaneous with

the filing of the complaint, petition or protest or the

bringing of an action. A demand for mediation shall be in

writing and served upon the manufacturer or distributor by

certified mail at an address designated for that manufacturer

or distributor within records of the dealer or distributor.

The demand for mediation shall contain a brief statement of

the dispute and the relief sought by the dealer or

distributor filing the demand.

(2)  Within 20 days after the date a demand for mediation

is served, the parties shall mutually select an independent

mediator and meet with that mediator for the purpose of

attempting to resolve the dispute. The meeting place shall be

in this Commonwealth in a location selected by the mediator.

The mediator may extend the date of the meeting for good

cause shown by either party or upon stipulation of both

parties.

(3)  The service of a demand for mediation under

paragraph (1) shall stay the time for the filing of any

complaint, petition, protest or action under this act until

representatives of both parties have met with a mutually

selected mediator for the purpose of attempting to resolve

the dispute. If a complaint, petition, protest or action is

filed before the meeting, the board or court shall enter an

order suspending the proceeding or action until the meeting

has occurred and may, upon written stipulation of all parties

to the proceeding or action that they wish to continue to

mediate under this subsection, enter an order suspending the

proceeding or action for as long a period as the board or

court considers appropriate. A suspension order issued under

this paragraph may be revoked upon motion of any party or

upon motion of the board or the court.

(4)  The board shall encourage dealers, manufacturers and

distributors to establish, maintain and administer a panel of

mediators who have the character, ability and training to

serve as mediators and who have knowledge of the vehicle

industry.

(5)  Mandatory mediation under this section shall not be

required of [manufacturers,] any of the following:

(i)  A dealer seeking to dual two or more franchises

or a dealer seeking a relocation involving a request to

dual two or more franchises unless another dealer of the

same line-make has a right to protest the proposed

relocation under section 27.

(ii)  Manufacturers, distributors or dealers of

motorcycles.

(b)  Arbitration of disputes between licensees.--After a

dispute arises, the licensees may voluntarily agree to submit a

dispute arising under this act pertaining to a complaint,

petition, protest or action to binding or nonbinding

arbitration. Any arbitration proceeding shall be voluntary,

initiated by serving a written demand for arbitration on the

other party, and shall be conducted under the provisions of 42

Pa.C.S. Ch. 73 Subch. A (relating to statutory arbitration) and

administered by representatives of dealers, manufacturers or

distributors.

(c)  Immunity and presumption of good faith by mediators and

arbitrators.--A mediator or arbitrator is immune from civil

liability for any good faith act or omission within the scope of

the mediator's or arbitrator's performance of his powers and

duties under this section. Every act or omission of a mediator

or arbitrator is presumed to be a good faith act or omission.

This presumption may be overcome only by clear and convincing

evidence.

Section 3.  Section 12 of the act, amended October 18, 2000,

(P.L.577, No.75), is amended to read:

Section 12.  Unlawful acts by manufacturers or distributors.

(a)  Unlawful coercive acts.--It shall be a violation for any

manufacturer, factory branch, distributor, field representative,

officer, agent or any representative whatsoever of such

manufacturer, factory branch or distributor licensed under this

act to require, attempt to require, coerce or attempt to coerce

any new vehicle dealer in this Commonwealth to:

(1)  Order or accept delivery of any new vehicle, part or

accessory thereof, equipment or any other commodity not

required by law which shall not have been voluntarily ordered

by the new vehicle dealer, except that this paragraph is not

intended to modify or supersede any terms or provisions of

the franchise requiring new vehicle dealers to market a

representative line of those vehicles which the manufacturer

or distributor is publicly advertising.

(2)  Order or accept delivery of any new vehicle with

special features, accessories or equipment not included in

the list price of such vehicles as publicly advertised by the

manufacturer or distributor.

(3)  Participate monetarily in an advertising campaign or

contest or to purchase unnecessary or unreasonable quantities

of any promotional materials, training materials, showroom or

other display decorations or materials at the expense of the

new vehicle dealer.

(4)  Enter into any agreement with the manufacturer or to

do any other act prejudicial to the new vehicle dealer by

threatening to terminate or not renew a franchise or any

contractual agreement existing between the dealer and the

manufacturer or distributor, except that this paragraph is

not intended to preclude the manufacturer or distributor from

insisting on compliance with the reasonable terms or

provisions of the franchise or other contractual agreement

and notice in good faith to any new vehicle dealer of the new

vehicle dealer's violation of such terms or provisions shall

not constitute a violation of the act.

(5)  Change the capital structure of the new vehicle

dealer or the means by or through which the new vehicle

dealer finances the operation of the dealership, provided

that the new vehicle dealer at all times meets any reasonable

capital standards determined by the manufacturer or

distributor in accordance with uniformly applied criteria,

and also provided that no change in the capital structure

shall 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. The consent shall be granted or

denied within 60 days of receipt of a written request from

the new vehicle dealer.

(6)  (i)  Refrain from participation in the management

of, investment in or the acquisition of any other line of

new vehicle or related products. This paragraph does not

apply unless the new vehicle dealer maintains a

reasonable line of credit for each make or line of new

vehicle, the new vehicle dealer remains in compliance

with the reasonable terms of the franchise agreement and

any reasonable facilities requirements of the

manufacturer or distributor, and no change is made in the

principal management of the new vehicle dealer. The

reasonable facilities requirements shall not include any

requirement that a new vehicle dealer establish or

maintain exclusive facilities, personnel or display space

when such requirements or any of them would be

unreasonable in light of economic conditions and would

not otherwise be justified by reasonable business

considerations. [Before the addition of a line-make to

the dealership facilities, the new vehicle dealer shall

first request the consent of the manufacturer or

distributor if required by the franchise agreement. Any

decision of the manufacturer or distributor with regard

to dualing of two or more franchises shall be rendered

within 60 days of receipt of a written request from the

new vehicle dealer. Failure on the part of the

manufacturer or distributor to timely respond to a

dualing request shall be deemed to be an approval of the

new vehicle dealer's request. No automobile, motorcycle

or truck manufacturer or distributor shall limit or

restrict the addition of a line-make to the dealership

facilities where the new vehicle dealer maintains a

reasonable line of credit for each make or line of new

vehicle and the new vehicle dealer remains in compliance

with the reasonable terms of the franchise agreement and

any reasonable facilities requirements of an automobile,

motorcycle or truck manufacturer or distributor.]

(ii)  Nothing in this paragraph shall permit the

relocation and addition of a line-make to the dealership

facilities without the new vehicle dealer providing

written certification to the manufacturer or distributor

that the new vehicle dealer, with the addition of a line-

make by the new vehicle dealer, will maintain a

reasonable line of credit for each make or line of new

vehicle and the new vehicle dealer will remain in

compliance with the reasonable terms of the franchise

agreement and any reasonable facilities requirements of

the manufacturer or distributor, excluding any exclusive

facility or nondualing requirements. Any objection by the

manufacturer or distributor with regard to the relocation

and dualing of two or more franchises shall be delivered

to the dealer within 15 30 days of receipt of the written

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certification from the new vehicle dealer. Failure on the

part of the manufacturer or distributor to timely respond

to a relocation and dualing certification shall be deemed

to be an approval of the new vehicle dealer's

certification notice of relocation and dualing of two or

more franchises. The manufacturer or distributor shall

execute and deliver a franchise reflecting the relocated

address of the dealership facilities to the new vehicle

dealer within 30 days of the date of the deemed approval.

(iii)  A dealer may file a complaint, petition or

protest, or bring an action in a court of competent

jurisdiction against a manufacturer or distributor, based

on a denial of a request by a dealer to relocate and dual

two or more franchises without first going through

mediation required under section 11. If a relocation and

dualing denial protest is filed with the board, a hearing

shall be held within 45 days of the protest's filing and

a final determination issued by the board within 90 days

of the protest filing. The burden of proof shall be on

the manufacturer or distributor to show that the

relocation and dualing is unreasonable. No automobile,

motorcycle or truck manufacturer or distributor may limit

or restrict the addition of a line-make to the dealership

facilities if the new vehicle dealer maintains a

reasonable line of credit for each make or line of new

vehicle and the new vehicle dealer remains in compliance

with the reasonable terms of the franchise agreement and

any reasonable facilities requirements of an automobile,

motorcycle or truck manufacturer or distributor.

Notwithstanding this subparagraph, this paragraph shall

apply if the dealer seeks to dual two or more line-makes

and no relocation will occur, but this subparagraph shall

not impair the rights of another dealer of the same line-

make to protest a proposed relocation under section 27.

(7)  Prospectively assent to a release, assignment,

novation, waiver or estoppel which would relieve any person

from liability to be imposed by this act or to require any

controversy between a new vehicle dealer and a manufacturer,

distributor or representative to be referred to any person

other than the duly constituted courts of the Commonwealth or

the United States of America, if such referral would be

binding upon the new vehicle dealer. A dealer and the

manufacturer, distributor or representative, by themselves or

through their respective counsel, are permitted to agree to

execute a written agreement or to arbitrate in a binding or

nonbinding manner after a controversy arises.

(8)  Expand, construct or significantly modify facilities

without assurances that the manufacturer or distributor will

provide a reasonable supply of new vehicles within a

reasonable time so as to justify such an expansion in light

of the market and economic conditions [or require a separate

facility for the sale or service of a line-make of a new

vehicle if the market and economic conditions do not clearly

justify the separate facility].

(8.1)  Unreasonably expand, construct or significantly

modify facilities in light of the market and economic

conditions or require a separate facility for the sale or

service of a line-make of a new vehicle if the market and

economic conditions do not clearly justify the separate

facility.

(9)  Agree as a condition to granting or renewing a

franchise to waive, limit or disclaim a right that the dealer

may have to protest the establishment or relocation of

another vehicle dealer in the relevant market area as

provided in section 27, unless such agreement is voluntary.

(b)  Violations.--It shall be a violation of this act for any

manufacturer, factory branch, distributor, field representative,

officer, agent or any representative whatsoever of such

manufacturer, factory branch or distributor licensed under this

act to:

(1)  Delay, refuse or fail to deliver new vehicles or new

vehicle parts or accessories in a reasonable time and in

reasonable quantity relative to the new vehicle dealer's

facilities and sales potential after acceptance of an order

from a new vehicle dealer having a franchise for the retail

sale of any new vehicle sold or distributed of an order from

a new vehicle dealer having a franchise for the retail sale

of any new vehicle sold or distributed by the manufacturer or

distributor as are covered by such franchise, if such

vehicle, parts or accessories are publicly advertised as

being available for immediate delivery. There is no violation

if the failure is caused by acts or causes beyond the control

of the manufacturer or distributor.

(2)  Unfairly discriminate among its new vehicle dealers

with respect to warranty, recall, service contract or any

other service required by the manufacturer or distributor

with regard to labor or parts reimbursement.

(3)  Unreasonably withhold consent to the sale, transfer

or exchange of the franchise to a qualified buyer capable of

being licensed as a new vehicle dealer in this Commonwealth

who meets the manufacturer's or distributor's reasonable

requirements for appointment as a dealer.

(4)  [Arbitrarily and capriciously] Unreasonably withhold

consent to the relocation of an existing new vehicle dealer.

If the relocation involves dualing of two or more franchises,

the requirements of subsection (a)(6)(ii) and (iii) shall

apply and paragraph (5) shall not apply.

(5)  Fail to respond in writing to a request for consent

as specified in paragraphs (3) and (4) within 60 days of

receipt of a written request on the forms, if any, generally

utilized by the manufacturer or distributor for such purposes

and containing the information required. The failure to

respond within the time period set forth in this paragraph

shall be deemed to be approval of the request, and the

manufacturer or distributor shall execute and deliver a

franchise to the applicant within 30 days of the expiration

of this time period. A manufacturer or distributor shall

acknowledge in writing to the applicant the receipt of the

forms, and, if the manufacturer or distributor requires

additional information to complete its review, the

manufacturer or distributor shall notify the applicant within

15 days of the receipt of the forms. If the manufacturer or

distributor fails to request additional information from the

applicant within 15 days after receipt of the initial forms,

the 60-day time period for approval shall be deemed to run

from the initial receipt date. Otherwise, the 60-day time

period for approval shall run from receipt of the

supplemental requested information. In no event shall the

total time period for approval exceed 75 days from the date

of the receipt of the initial forms.

(6)  Prevent or attempt to prevent by contract or

otherwise, any new vehicle dealer from changing the executive

management control of the new vehicle dealer unless the

manufacturer or distributor, having the burden of proof, can

show that such change of executive management will result in

executive management or control by a person or persons who

are not of good moral character or who do not meet

reasonable, preexisting, and, with consideration given to the

volume of sales and service of the dealership, uniformly

applied minimum business experience standards. Where the

manufacturer or distributor rejects a proposed change in

executive management control, the manufacturer or distributor

shall give written notice of its reasons to the dealer within

60 days of notice to the manufacturer by the dealer of the

proposed change; otherwise the change in the executive

management of the new vehicle dealer shall be presumptively

deemed approved.

(7)  Offer in connection with a sale of a new vehicle or

vehicles to the Federal Government, the Commonwealth or any

political subdivision thereof, any discounts, refunds or any

other type of inducement to any new vehicle dealer without

making the same offer or offers available to all other of its

new vehicle dealers within this Commonwealth. This paragraph

shall not be construed to prevent the offering of incentive

programs or other discounts if the discounts are equally

available to all franchised vehicle dealers in this

Commonwealth on a proportionally equal basis.

(8)  Fail to indemnify its franchised dealers,

notwithstanding the terms of any franchise agreement, against

any judgment for damages or settlement approved in writing by

the manufacturer or distributor, including, but not limited

to, court costs and reasonable attorney fees of the new

vehicle dealer, arising out of complaints, claims or

lawsuits, including, but not limited to, strict liability,

negligence, misrepresentation, express or implied warranty or

rescission of the sale as defined in 13 Pa.C.S. § 2608

(relating to revocation of acceptance in whole or in part) to

the extent that the judgment or settlement relates solely to

the alleged defective or negligent functions by the

manufacturer or distributor beyond the control of the dealer.

(9)  Sell or exchange with a second or final stage

manufacturer, retail consumer or end user except through a

licensed new vehicle dealer. This paragraph shall not apply

to manufacturer or distributor sales of new vehicles to the

Federal Government, charitable organizations and employees of

the manufacturer.

(10)  (i)  Modify a franchise during the term of the

franchise or upon its renewal if the modification

substantially and adversely affects the new vehicle

dealer's rights, obligations, investment or return on

investment without giving 60 days' written notice of the

proposed modification to the new vehicle dealer unless

the modification is required by law, court order or the

board. Within the 60-day notice period, the new vehicle

dealer may file with the board and serve notice upon the

manufacturer or distributor a protest requesting a

determination of whether there is good cause for

permitting the proposed modification. The board shall

promptly schedule a hearing and decide the matter within

180 days from the date the protest is filed. Multiple

protests pertaining to the same proposed modification

shall be consolidated for hearing. The proposed

modification shall not take effect pending the

determination of the matter. In determining whether there

is good cause for permitting a proposed modification, the

board shall consider any relevant factors, including, but

not limited to:

(A)  The reasons for the proposed modification.

(B)  Whether the proposed modification is applied

to or affects all new vehicle dealers in a

nondiscriminatory manner.

(C)  Whether the proposed modification will have

a substantial and adverse effect upon the new vehicle

dealer's investment or return on investment.

(D)  Whether the proposed modification is in the

public interest.

(E)  Whether the proposed modification is

necessary to the orderly and profitable distribution

of products by the manufacturer or distributor.

(F)  Whether the proposed modification is offset

by other modifications beneficial to the new vehicle

dealer.

(ii)  This paragraph shall not apply to recreational

vehicle manufacturers, distributors or dealers.

(11)  Fail or refuse to offer to its new vehicle dealers

all new model vehicles manufactured for that line-make

franchise or require any of its new vehicle dealers to pay an

unreasonable fee, unreasonably remodel or renovate the new

vehicle dealer's existing facilities, unreasonably purchase

or construct a new facility, unreasonably purchase parts,

supplies, tools, equipment, operational services, other

merchandise or unreasonably participate in training programs

in order to receive any new model vehicles, parts or

accessories. It shall not be a violation of this paragraph if

the manufacturer or distributor fails to supply new vehicle

dealers with model vehicles, parts or accessories due to

circumstances beyond the control of the manufacturer or

distributor, including, but not limited to, strike or labor

difficulty, shortage of materials, freight embargo or

temporary lack of capacity.

(12)  Operate a system for the allocation of new vehicles

which is not reasonable or fair to a new vehicle dealer. Upon

the written request of any of its new vehicle dealers, a

manufacturer or distributor shall disclose to the new vehicle

dealer the method on which new vehicles are allocated among

the new vehicle dealers of the same line-make. The

manufacturer distributor has the burden of establishing the

fairness of its allocation.

(13)  Own, operate or control, either directly or

indirectly, any vehicle warranty facility. Nothing in this

subsection shall prohibit any manufacturer or distributor

from owning, operating or controlling any warranty facility

for warranty repairs on vehicles owned or operated by the

manufacturer or distributor.

(14)  Compel a dealer through a finance subsidiary of the

manufacturer or distributor to agree to unreasonable

operating requirements or to directly or indirectly terminate

a new vehicle dealer through the actions of a finance

subsidiary of the manufacturer or distributor. This paragraph

shall not limit the right of a financing entity to engage in

business practices in accordance with the trade of retail or

wholesale vehicle financing.

(15)  Use any subsidiary corporation, affiliated

corporation or any other controlled corporation, partnership,

association, entity or person to accomplish what would

otherwise be illegal conduct under this act on the part of

the manufacturer or distributor.

(16)  Release to any third party any customer information

which has been provided by the new vehicle dealer to the

manufacturer or distributor if the customer objects in

writing to releasing the information, unless the information

is necessary for the manufacturer or distributor to meet its

obligations to customers or new vehicle dealers under

requirements imposed by Federal or State law.

(17)  Require or coerce or attempt to require or coerce a

new vehicle dealer to pay attorney fees of the manufacturer

or distributor related to hearings and appeals brought under

this act.

(18)  Vary the price charged to any of its new vehicle

dealers, which has the effect of causing a difference in the

price of any similarly equipped new vehicle to its new

vehicle dealers or to the ultimate purchaser. This paragraph

shall not be construed to prevent the offering of incentive

programs or other discounts if the incentive or discounts are

available to all competing new vehicle dealers of the same

line-make in this Commonwealth on a proportionately equal

basis.

(c)  Restriction on ownership of dealer.--

(1)  Except as otherwise provided in this subsection, a

manufacturer or distributor shall not:

(i)  own or hold an interest, other than a passive,

minority interest in a publicly traded dealer held for

investment purposes, in a dealer licensed under this act

which is engaging in the business of buying, selling or

exchanging vehicles; or

(ii)  operate or control a dealer licensed under this

act which is engaging in the business of buying, selling

or exchanging vehicles.

(2)  A manufacturer or distributor may own or hold an

interest in a dealer or otherwise operate or control a dealer

for a period not to exceed 12 months from the date the

manufacturer or distributor acquires an interest in the

dealer if:

(i)  The person from whom the manufacturer or

distributor acquired the dealer was a franchised dealer.

(ii)  The dealer is for sale by the manufacturer or

distributor at a reasonable price and on reasonable terms

and conditions.

(3)  On a showing by a manufacturer or distributor of

good cause, the board may extend the time limit set forth in

paragraph (2). An extension under this paragraph may not

exceed 12 months. Where an extension under this paragraph is

sought, the manufacturer or distributor shall provide notice

delivered 30 days before the extension request is filed with

the board to all the same line-make dealers within a ten-mile

radius of the manufacturer or distributor owned, operated or

controlled dealer. An application for an extension is subject

to protest by a dealer of the same line-make who is within

the ten-mile radius of the manufacturer or distributor owned,

operated or controlled dealer.

(4)  For the primary purpose of broadening the diversity

of its dealer body and enhancing opportunities for qualified

persons who are part of a group who have historically been

underrepresented in its dealer body or other qualified

persons who lack the resources to purchase a dealer outright,

a manufacturer or distributor may temporarily own an interest

in a dealer if the manufacturer's or distributor's

participation in the dealer is in a bona fide relationship

with a franchised dealer who:

(i)  At or prior to the time the prospective dealer

takes an equity interest in the dealer, the prospective

dealer is obligated to make a significant investment in

the dealer, subject to loss.

(ii)  Has an ownership interest in the dealer.

(iii)  Operates the dealer under a written agreement

to acquire full ownership of the dealer within a

reasonable time and under reasonable terms and

conditions.

(5)  A manufacturer or distributor shall not unfairly

discriminate or compete in terms of any sales, service or

operational activities with a new vehicle dealer of the same

line-make when a manufacturer or distributor operates a new

vehicle dealer under this subsection.

(6)  A manufacturer may own, directly or indirectly, an

interest in an entity that owns, operates or controls a motor

vehicle dealership trading solely in motor vehicles having a

gross vehicle weight less than 8,500 pounds that are of the

same line-make franchised by the manufacturer, provided that

each of the following conditions are met:

(i)  All of the motor vehicle dealerships selling

such manufacturer's motor vehicles in this Commonwealth

trade exclusively in the manufacturer's line-make.

(ii)  All of the manufacturer's franchise agreements

confer rights on the dealer of the line-make to develop

and operate, within a defined geographic territory or

area, as many dealership facilities as the dealer and

manufacturer shall agree are appropriate.

(iii)  Not fewer than half of the dealers of the

line-make within this Commonwealth own and operate two or

more dealership facilities in the geographic territory or

area covered by the franchise agreement with the

manufacturer.

(iv)  During any period in which the manufacturer has

such an ownership interest, the manufacturer has no more

than 12 franchise agreements with new motor vehicle

dealers licensed by the board to do business within this

Commonwealth.

(v)  Except as otherwise permitted under other

provisions of this act, the manufacturer does not acquire

or hold, either directly or indirectly, an ownership

interest of more than 45% in any motor vehicle dealership

that the manufacturer did not already own, directly or

indirectly, as of the effective date of this subsection.

(vi)  As of the effective date of this subsection,

the manufacturer shall have continuously owned, directly

or indirectly, for a period of not less than 18 months,

one or more new motor vehicle dealerships in this

Commonwealth of the same line-make as the manufacturer.

(d)  Applicability.--

(1)  Subsections (b)(11) through (17) and (c) shall not

apply to manufacturers, distributors or dealers of

manufactured housing or recreational vehicles.

(2)  Subsections (b)(13) and (15) and (c) shall not apply

to the ownership or activities of a manufacturer in the

operation of a licensed dealer or a licensed dealer that

fulfills the following conditions:

(i)  The manufacturer maintains an ownership interest

in, operates or controls a licensed dealer whose primary

business purpose is the rental of vehicles.

(ii)  Vehicles sold by the licensed dealer primarily

engaged in the business of rental vehicles are limited to

those vehicles used for rental purposes or vehicles

obtained in trade for such vehicles.

(iii)  Any warranty repairs are limited to those

repairs conducted on the vehicles used in the vehicle

rental business or vehicles sold by the licensed dealer.

Section 4.  Section 17 of the act, added April 19, 1996

(P.L.104, No.27), is amended to read:

Section 17.  Manufacturer or distributor repurchase of inventory

and equipment.

(a)  Return of property for repurchase.--A new vehicle dealer

shall return property, including, but not limited to, vehicle

inventory, parts, equipment, tools and signs, as permitted under

this section or as set forth in the franchise agreement, to the

manufacturer or distributor within 90 days of the effective date

of any termination or nonrenewal of a franchise or upon a

termination or cessation of a part of a manufacturer's or

distributor's business operations throughout the United States

which is not part of any change in ownership, operation or

control of all or any part of the manufacturer's or

distributor's business under section 14. The manufacturer or

distributor shall supply the new vehicle dealer with

instructions on the method by which the new vehicle dealer must

return the property to the manufacturer or distributor. Within

60 days of tender of the property to the manufacturer or

distributor, the manufacturer or distributor, including medium

and heavy-duty truck component and engine manufacturers or

distributors who provide integral parts of vehicles or provide

major components by selling directly to dealers, shall

repurchase from the new vehicle dealer and remit payment to the

new vehicle dealer in accordance with their respective interest

in:

(1)  Any new, undamaged and unsold vehicle inventory [of

the current model year or purchased from a manufacturer or

distributor within 120 days prior to receipt of notice of

termination or nonrenewal], whether acquired from the

manufacturer or distributor or from another dealer of the

same line-make, of the current and prior model year as

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determined on a model-by-model basis within the line-make 

within 18 months of the termination date, provided the

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vehicle has less than [500] 1,000 750 miles registered on the

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odometer, not including mileage incurred in delivery from the

manufacturer or in transporting the vehicle between dealers

for sale, at the dealer's net acquisition cost, plus any cost

to the dealer for returning the vehicle inventory to the

manufacturer or distributor. A dealer shall be entitled to

the payment under this paragraph for new and undamaged motor

vehicles having a gross vehicle weight rating of at least

10,001 pounds of current and two prior model years as

determined on a model-by-model basis within the line-make.

(2)  All new, unused, undamaged parts listed in the

current price catalog acquired from a manufacturer or

distributor or a source approved or recommended by the

manufacturer or distributor at the dealer price listed in the

current parts catalog, less applicable allowances, plus 5% of

the catalog price of the part for the cost of packing and

returning the parts to the manufacturer or distributor.

Reconditioned or core parts shall be valued at their core

value, the price listed in the current parts catalog or the

amount paid for expedited return of core parts, whichever is

higher.

(3)  Any special tools or equipment offered for sale

during the three years preceding termination or nonrenewal

and each trademark or trade name bearing signs which was

recommended or required by the manufacturer or distributor at

fair market value at the time the notice of termination or

nonrenewal is given.

In the event the inventory is subject to a security interest,

the manufacturer may make payment jointly to the dealer and the

holder of the security interest.

(b)  Failure to pay sums due.--A manufacturer or distributor

who fails to pay those sums due the dealer within the prescribed

time or at such time as the dealer proffers good title prior to

the prescribed time for payment is liable to the new vehicle

dealer for:

(1)  the greater of dealer net acquisition cost, fair

market value or current price of inventory;

(2)  interest on the amount due, calculated at the rate

applicable to a judgment of court; and

(3)  reasonable attorney fees and costs.

(c)  Limited applicability.--This section shall not apply to

manufacturers, distributors or dealers of recreational vehicles

or manufactured housing, nor shall it apply to motorcycle

manufacturers, distributors or dealers except when the

unilateral termination or failure to renew is by the

manufacturer or distributor.

Section 5.  This act shall take effect in 60 days.