North Carolina 2021-2022 Session Status: Enacted 2 R cosponsors

HB 403 — Clarify Motor Vehicle Franchise Laws.

Last action — Signed by Gov. 9/10/2021

  1. ✓
    Introduced
  2. ✓
    In Committee
  3. ✓
    Passed House
  4. ✓
    Passed Senate
  5. ✓
    To Executive
  6. 6
    Enacted

This bill has been enacted into law. Introduced March 24, 2021. Enacted.

Odds of enactment

High chance

Based on the sponsor, cosponsors, and committee posture, this bill has a high chance of becoming law.

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A statistical estimate from our own model of past outcomes — an insight, not a guarantee. Policymaking is volatile.

Prognosis

Likely to advance 76% · moderate confidence
  • Enacted

    Current position in the legislative process.

  • 3 sponsors

    1 primary, 2 co-sponsors signed on.

  • Single-party support

    Sponsorship is currently within one party (2 R).

  • Cleared a recorded vote

    Passed 2 recorded votes so far.

Based on stage, sponsorship breadth, committee status, recorded votes, and cross-state momentum — a description of the observable signals, not a prediction.

Bill Text

What changed in the latest version

781 added · 772 removed

Plain-language change summary

The latest version of House Bill 403 clarifies the process for franchisors to object to a proposed transfer, sale, or change at a dealership. Specifically, it requires that any objection must be communicated within 30 days and must include detailed factual and legal reasons for the objection. This change helps ensure that objections are based on specific and relevant criteria, which can protect both the franchisors' interests and the rights of dealers looking to make changes. This matters because it aims to create a fairer and more transparent process for all parties involved in dealership transactions.

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GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2021 H 2 HOUSE BILL 403 Committee Substitute Favorable 5/5/21 Short Title:
GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2021 H 1 HOUSE BILL 403 Short Title:
Representatives B.
Jones and Wray (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
March 25, 2021 A BILL TO BE ENTITLED AN ACT TO REVISE AND CLARIFY THE LAWS GOVERNING NEW MOTOR VEHICLE DEALER FRANCHISES.
Transportation, if favorable, Rules, Calendar, and Operations of the House March 25, 2021 A BILL TO BE ENTITLED AN ACT TO REVISE AND CLARIFY THE LAWS GOVERNING NEW MOTOR VEHICLE DEALER FRANCHISES.
The If the franchisor objects to the proposed transfer,sale, assignment, relocation, or change, the franchisor shall send the dealership and the proposed transferee notice of objection, byregistered or certified mail, return receipt requested, to the proposed transfer, sale, assignment, *H403-v-2* General Assembly Of North Carolina Session 2021 relocation, or change within 30 days after receipt of notice from the dealer, as provided in this section.
The If the franchisor objects to the proposed transfer,sale, assignment, relocation, or change, the franchisor shall send the dealership and the proposed transferee notice of objection, byregistered or certified mail, *H403-v-1* General Assembly Of North Carolina Session 2021 return receipt requested, to the proposed transfer, sale, assignment, relocation, or change within 30 days after receipt of notice from the dealer, as provided in this section.
With respect to a proposed transfer of ownership, sale, or assignment, the sole issue for determination by the Commissioner and the sole issue upon which the Commissioner shall hear or consider evidence is Page 2 House Bill 403-Second Edition General Assembly Of North Carolina Session 2021 whether, by reason of lack of good moral character, lack of general business experience, or lack of financial ability, the proposed transferee is unfit to own the dealership.
With respect to a proposed transfer of ownership, sale, or assignment, the sole issue for determination by the Commissioner and the sole Page 2 House Bill 403-First Edition General Assembly Of North Carolina Session 2021 issue upon which the Commissioner shall hear or consider evidence is whether, by reason of lack of good moral character, lack of general business experience, or lack of financial ability, the proposed transferee is unfit to own the dealership.
House Bill 403-Second Edition Page 3 General Assembly Of North Carolina Session 2021 1.
House Bill 403-First Edition Page 3 General Assembly Of North Carolina Session 2021 1.
Condition, directly or indirectly, the approval of the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale, succession, or assignment of a dealer's franchise, or a change in the executive management or principal operator of the dealership upon the existing or proposed dealer's willingness to renovate, construct, or relocate the dealership facility, or to enroll in a facility program;
Condition, directly or indirectly, the approval of the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale, succession, or assignment of a dealer's franchise, or a change in the executive management or principal operator of the dealership upon the existing or proposed dealer's willingness to renovate, construct, or relocate the dealership facility, or to enroll in a facility program.
provided, however, that this provision shall not apply to or affect the validity of an ownership transfer or change in executive management or principal operator of the dealership that occurred prior to July 1, 2021.
Condition, directly or indirectly, the approval of the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale, succession, or assignment of a dealer's franchise, or a change in the executive management or principal operator of the dealership, or a dealer's proposed relocation of the dealership facility, or a dealer's satisfaction of the terms of any incentive program or contest, upon the existing or proposed dealer's Page 4 House Bill 403-Second Edition General Assembly Of North Carolina Session 2021 willingness to enter into a right of first refusal in favor of the manufacturer." SECTION 1.(b) G.S.
Condition, directly or indirectly, the approval of the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale, succession, or assignment of a dealer's franchise, or a change in the executive management or principal operator of the dealership, or a dealer's proposed relocation of the dealership facility, or a dealer's satisfaction of the terms of any incentive program or contest, upon the existing or proposed dealer's willingness to enter into a right of first refusal in favor of the manufacturer." SECTION 1.(b) G.S.
"(7) Notwithstanding the terms of any contract or agreement, to prevent or refuse to honor the succession to a dealership, including the franchise, by a motor vehicle dealer's designated successor as provided for under this subsection.
Page 4 House Bill 403-First Edition General Assembly Of North Carolina Session 2021 "(7) Notwithstanding the terms of any contract or agreement, to prevent or refuse to honor the succession to a dealership, including the franchise, by a motor vehicle dealer's designated successor as provided for under this subsection.
1.
Within 30 days after receiving written notice of the identity of the owner's designated successor and general information as to the financial ability and general business qualifications of the designated successor, the franchisor shall send the owner and designated successor notice of objection, by registered or certified mail, return receipt requested, to the appointment of the designated successor.
The notice of objection shall state in detail all facts which constitute the basis for the contention on the part of the manufacturer or distributor that good cause, as defined in this sub-subdivision below, exists for rejection of the designated successor.
Failure by the franchisor to send notice of objection within 30 days and otherwise as provided in thissub-subdivisionshall constitutewaiverbythefranchisor of any right to object to the appointment of the designated successor.
In determining whether good cause exists for rejection of the owner's appointed designated successor, the manufacturer or distributor has the burden of proving that the designated successor is a person who is not of good moral character or does not meet the franchisor's existing written and reasonable standards and, considering the volume of sales and service of the new motor vehicle dealer, uniformly applied minimum business experience standards in the market area.area for the proposed day-to-day principal operator of the dealership.
In determining whether good cause exists for rejection of the owner's appointed designated successor, the manufacturer or distributor has the burden of proving that the designated successor is a person who is not of good moral character or does not meet the franchisor's existing written and reasonable standards and, considering the volume of sales and service of the new motor vehicle dealer, uniformly applied minimum business experience standards in the market area.does not possess reasonable minimum general business experience.
… 5.
Nothing in this sub-subdivision shall preclude a manufacturer or distributor from, upon its receipt of written notice from an owner of the identity of the owner's designated successor, requiring that the designated successor promptly provide personal and financial data that is reasonably necessary to determine the financial ability and general business qualifications of the designated successor;
provided, however, that such a request for additional information shall not delay any of the time periods or constraints contained herein.
Within 60 days after the death or incapacity of the owner or principal operator, a designated successor appointed in substantial compliance with this section shall give the affected manufacturer or distributor written notice of his or her succession to the position of owner or principal operator of the new motor vehicle dealership;
Within 60 days after the death or incapacity of the owner or principal operator, a designated successor appointed in substantial compliance with this section shall give the affected manufacturer or distributor written notice of his or her succession to the position of owner or House Bill 403-First Edition Page 5 General Assembly Of North Carolina Session 2021 principal operator of the new motor vehicle dealership;
Within 30 days of receipt of the notice by the manufacturer or distributor from the designated successor provided in this sub-subdivision, the manufacturer or distributor may request that the designated successor complete the application forms generally utilized by the manufacturer or distributor to review the designated successor's qualifications to establish a successor dealership.
Within 30 days of receipt of the notice by the manufacturer or distributor from the designated successor provided in this sub-subdivision, the manufacturer or distributor may request that the designated successor complete the application forms generally utilized by the manufacturer or distributor to review the designated successor's general business qualifications to establish a successor dealership.
Within 30 days of receipt of the completed forms, the manufacturer or distributor shall send a letter by House Bill 403-Second Edition Page 5 General Assembly Of North Carolina Session 2021 certified or registered mail, return receipt requested, advising the designated successor of facts and circumstances which have changed since the manufacturer's or distributor's original approval of the designated successor, and which have caused the manufacturer or distributor to object to the designated successor.
Within 30 days of receipt of the completed forms, the manufacturer or distributor shall send a letter by certified or registered mail, return receipt requested, advising the designated successor of facts and circumstances which have changed since the manufacturer's or distributor's original approval of the designated successor, and which have caused the manufacturerordistributorto object to thedesignatedsuccessor.Upon receipt of such notice, the designated successor may either designate an alternative successor or may file a request for evidentiary hearing in accordance with the procedures provided in sub-subdivisions b.2.
Upon receipt of such notice, the designated successor may either designate an alternative successor or may file a request for evidentiary hearing in accordance with the procedures provided in sub-subdivisions b.2.
– 5.
–5.
e.
The designated successor shall agree to be bound by all terms and conditions of the franchise in effect between the manufacturer or distributor and the owner at the time of the owner's or principal operator's death or incapacity, if so requested in writing by the manufacturer or distributor subsequent to the owner's or principal operator's death or incapacity.
f.
This section does not preclude an owner of a new motor vehicle dealership from designating any person as his or her successor by written instrument filed with the manufacturer or distributor, and, in the event there is an inconsistency between the successor named in such written instrument and the designated successor otherwise appointed by the owner consistent with the provisions of this section, and that written instrument has not been revoked by the owner of the new motor vehicle dealership in writing to the manufacturer or distributor, then the written instrument filed with the manufacturer or Page 6 House Bill 403-First Edition General Assembly Of North Carolina Session 2021 distributor shall govern as to the appointment of the successor.
The failure or refusal of the designated successor to agree to any terms or provisions that are in addition to or that vary from any of the terms or provisions contained in the existing franchise between the parties shall not constitute good cause for the manufacturer or distributor to object to the designated successor.
20-305(4) above, or to prevent or attempt to prevent, through the exercise of any contractual right of first refusal refusal, option to purchase, or otherwise, a dealer located in this State from transferring the franchised business to such persons or other entities as the dealer shall designate in accordance with G.S.
20-305(4) above, or to prevent or attempt to prevent, through the exercise of any contractual right of first refusal or otherwise, a dealer located in this State from either (i) transferring the franchised business to such persons or other entities as the dealer shall designate in accordance with G.S.
20-305(4).
20-305(4).G.S.
20-305(4)or(ii)purchasing, enteringintoanoption to purchase, or complying with anysubjective standards or asserting anylegal or equitable rights relating to the franchise.
Upon the occurrence of the change, the Division shall deny an application of a manufacturer, factory branch, distributor, or distributor branch for a license or license renewal unless the applicant for a license as a manufacturer, factory branch, distributor, or distributor branch offers to each motor vehicle dealer who is a partyto a franchise for that line make line make, without any separate or additional fee or charge, a new franchise agreement containing substantially the same provisions which were contained in the previous franchise agreement or files an affidavit with the Division acknowledging its undertaking to assume and fulfill fulfill, without Page 6 House Bill 403-Second Edition General Assembly Of North Carolina Session 2021 anyseparate or additionalfee or chargeto its dealers, therights, duties, and obligations of its predecessor under the previous franchise agreement.
Upon the occurrence of the change, the Division shall deny an application of a manufacturer, factory branch, distributor, or distributor branch for a license or license renewal unless the applicant for a license as a manufacturer, factory branch, distributor, or distributor branch offers to each motor vehicle dealer who is a partyto a franchise for that line make line-make, without any separate or additional fee or charge, a new franchise agreement containing substantially the same provisions which were contained in the previous franchise agreement or files an affidavit with the Division acknowledging its undertaking to assume and fulfill fulfill, without anyseparate or additionalfee or chargeto its dealers, therights, duties, and obligations of its predecessor under the previous franchise agreement.
Should the Division fail to deny an application following the change, as required bythis subsection, the Division shall then deny any subsequent renewal of such license until such time as the manufacturer, factory branch, distributor, or distributor branch offers to each motor vehicle dealer who is a party to a franchise for that line make a new franchise agreement on substantially the same provisions which were contained in the previous franchise agreement." SECTION 2.(b) G.S.
Should the Division fail to deny an application following the change, as required bythis subsection, the Division shall then deny any subsequent renewal of such license until such time as the House Bill 403-First Edition Page 7 General Assembly Of North Carolina Session 2021 manufacturer, factory branch, distributor, or distributor branch offers to each motor vehicle dealer who is a party to a franchise for that line-make a new franchise agreement on substantially the same provisionswhichwerecontainedinthepreviousfranchiseagreement." SECTION 2.(b) G.S.
"(9) To require, coerce, or attempt to coerce any new motor vehicle dealer in this State to purchase or lease a specific dealer management computer system for communication with the manufacturer, factory branch, distributor, or distributor branch or anycomputer hardware or software used for anypurpose other than the maintenance or repair of motor vehicles, to participate monetarily in an advertising campaign or contest, or to purchase unnecessary or unreasonable quantities of any promotional materials, training materials, training programs, showroom or other display decorations, materials, computer equipment or programs, charging stations, or special tools at the expense of the new motor vehicle dealer, provided that nothing in this subsection shall preclude a manufacturer or distributor from including an unitemized uniform charge in the base price of the new motor vehicle charged to the dealer where such charge is attributable to advertising costs incurred or to be incurred by the manufacturer or distributor in the ordinary courses of its business.
"(9) To require, coerce, or attempt to coerce any new motor vehicle dealer in this State to purchase or lease a specific dealer management computer system for communication with the manufacturer, factory branch, distributor, or distributor branch or anycomputer hardware or software used for anypurpose other than the maintenance or repair of motor vehicles, to participate monetarily in an advertising campaign or contest, or to purchase unnecessary or unreasonable quantities of any promotional materials, training materials, training programs, showroom or other display decorations, materials, computer equipment or programs, or special tools at the expense of the new motor vehicle dealer, provided that nothing in this subsection shall preclude a manufacturer or distributor from including an unitemized uniform charge in the base price of the new motor vehicle charged to the dealer where such charge is attributable to advertising costs incurred or to be incurred by the manufacturer or distributor in the ordinary courses of its business.
Notwithstanding the terms or conditions of any franchise or other agreement, policy, or incentive program, it is unlawful for any manufacturer or distributor to require, coerce, or attempt to coerce any of its franchised dealers in this State to (i) purchase or lease any electric vehicle charging stations at the dealer's expense unless the dealer has indicated to the manufacturer or distributor the dealer's intention to begin offering for sale to the public or providing warranty service on electric vehicles manufactured or distributed by that manufacturer or distributor;
Notwithstanding the terms or conditions of any franchise or other agreement, policy, or incentive program, it is unlawful for any manufacturer or distributor to require, coerce, or attempt to coerce any of its franchised dealers in this State to either (i) purchase or lease anyelectric vehicle charging stations at the dealer's expense unless the dealer is actually offering for sale to the public or providing warranty service on electric vehicles manufactured or distributed by that manufacturer or distributor or (ii) purchase or lease, at the dealer's expense, more than one electric vehicle charging station per dealership location owned by the dealer.
or, (ii) if the dealer is offering for sale to the public or providing warranty service on electric vehicles manufactured or distributed by that manufacturer or distributor, purchase or lease, at the dealer's expense, either (a) more than the number of electric vehicle charging stations for use by service technicians and customer education than would reasonably be necessary for the dealer to have for these purposes during the following three-year period;
Notwithstanding the terms or conditions of any franchise or other agreement, policy, or incentive program, it is unlawful for any manufacturer or distributor to require that anyof its franchised dealers in this State purchase or lease any diagnostic equipment or tool for the maintenance, servicing, or repair of electric vehicles if the dealer has other diagnostic equipment or tools available that can perform the work to the standards required bythe applicable manufacturer or distributor.
or (b) any electric vehicle charging stations for use anywhere other than the dealer's service area.
To the extent practicable, manufacturers and distributors having franchised dealers in this State that sell or service multiple brands of electric vehicles manufactured or distributed by the same manufacturer or distributor are required to design, manufacture, and distribute diagnostic equipment, tools, and parts that can be used interchangeably with all brands of electric vehicles sold or distributed to their dealers in this State.
Notwithstanding the terms or conditions of any franchise or other agreement, policy, or incentive program, it is unlawful for any manufacturer or distributor to require that anyof its franchised dealers in this State purchase or lease any diagnostic equipment or tool for the maintenance, servicing, or repair of electric vehicles if the dealer has other diagnostic equipment or tools available for servicing another brand or line make of vehicle manufactured or distributed by that manufacturer or distributor that can perform the work to the standards required by the applicable manufacturer or distributor.
Notwithstanding the terms or conditions of any franchise or other agreement, a franchised dealer that sells fewer than 250 new motor vehicles per yearmayrequestapprovalfromthemanufacturertoenterintoatoolloaner agreement with another dealer, in lieu of purchasing or leasing any special tools required by any manufacturer, factory branch, distributor, or distributor branch, provided, however, that all of the following conditions are satisfied:
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Notwithstanding the terms or conditions of any franchise or other agreement, a franchised dealer that sells fewer than 250 new motor vehicles per yearmayrequestapprovalfromthemanufacturertoenterintoatoolloaner House Bill 403-Second Edition Page 7 General Assembly Of North Carolina Session 2021 agreement with another dealer, in lieu of purchasing or leasing any special tools required by any manufacturer, factory branch, distributor, or distributor branch, provided, however, that all of the following conditions are satisfied:
– Any motor propelled vehicle, regardless of the size and type of motor or source of power, trailer or semitrailer, required to be registered under the laws of this State.
– Any motor propelled vehicle, regardless of the size and type of motor, source of power, or mode of operation, trailer or semitrailer, Page 8 House Bill 403-First Edition General Assembly Of North Carolina Session 2021 required to be registered under the laws of this State.
…." REQUIREMENT TO PURCHASE PRE-OWNED VEHICLES SECTION 3.(a) G.S.
…." 5 REQUIREMENT TO PURCHASE PRE-OWNED VEHICLES SECTION 3.(a) G.S.
20-305(9) reads as rewritten:
20-305(9), as rewritten by subsection (b) of Section 2 of this act, reads as rewritten:
"(9) To require, coerce, or attempt to coerce any new motor vehicle dealer in this State to purchase or lease a specific dealer management computer system for communication with the manufacturer, factory branch, distributor, or distributor branch or anycomputer hardware or software used for anypurpose other than the maintenance or repair of motor vehicles, to participate monetarily in an advertising campaign or contest, to purchase off-lease or other pre-owned vehicles, or to purchase unnecessary or unreasonable quantities of anypromotional materials, training materials, training programs, showroom or other display decorations, materials, computer equipment or programs, or special tools at the expense of the new motor vehicle dealer, provided that nothing in this subsection shall preclude a manufacturer or distributor from including an unitemized uniform charge in the base price of the new motor vehicle charged to the dealer where such charge is attributable to advertising costs incurred or to be incurred by the manufacturer or distributor in the ordinary courses of its business.
"(9) To require, coerce, or attempt to coerce any new motor vehicle dealer in this State to purchase or lease a specific dealer management computer system for communication with the manufacturer, factory branch, distributor, or distributor branch or anycomputer hardware or software used for anypurpose other than the maintenance or repair of motor vehicles, to participate monetarily in an advertising campaign or contest, to purchase off-lease or other pre-owned vehicles either as a part of the franchise agreement or as a part of an incentive program, or to purchase unnecessary or unreasonable quantities of anypromotional materials, training materials, training programs, showroom or other display decorations, materials, computer equipment or programs, or special tools at the expense of the new motor vehicle dealer, provided that nothing in this subsection shall preclude a manufacturer or distributor from including an unitemized uniform charge in the base price of the new motor vehicle charged to the dealer where such charge is attributable to advertising costs incurred or to be incurred by the manufacturer or distributor in the ordinary courses of its business.
Notwithstanding the terms or conditions of any franchise or other agreement, a franchised dealer that sells fewer than 250 new motor vehicles Page 8 House Bill 403-Second Edition General Assembly Of North Carolina Session 2021 per yearmayrequestapprovalfromthemanufacturertoenterintoatoolloaner agreement with another dealer, in lieu of purchasing or leasing any special tools required by any manufacturer, factory branch, distributor, or distributor branch, provided, however, that all of the following conditions are satisfied:
Notwithstanding the terms or conditions of any franchise or other agreement, a franchised dealer that sells fewer than 250 new motor vehicles per yearmayrequestapprovalfromthemanufacturertoenterintoatoolloaner agreement with another dealer, in lieu of purchasing or leasing any special tools required by any manufacturer, factory branch, distributor, or distributor branch, provided, however, that all of the following conditions are satisfied:
…." SECTION 3.(b) G.S.
…." House Bill 403-First Edition Page 9 General Assembly Of North Carolina Session 2021 SECTION 3.(b) G.S.
Nothing herein shall prevent a manufacturer from requiring that a new motor vehicle dealer fairly represent and inventory the full line of current model year new motor vehicles which are covered by the franchise agreement, provided that such inventory representation requirements are not unreasonable under the circumstances." CLARIFICATION OF DEALER'S RIGHT TO CONTROL LOCATION SECTION 4.
Nothing herein shall prevent a manufacturer from requiring that a new motor vehicle dealer fairly represent and inventory the full line of current model year new motor vehicles which are covered by the franchise agreement, provided that such inventory representation requirements are not unreasonable under the circumstances." CLARIFICATION OF DEALER'S RIGHT TO CONTROL LOCATION SECTION 4.(a) G.S.
G.S.
"(12) To require, coerce, or attempt to coerce any new motor vehicle dealer in this State to change location of the dealership, or to make any substantial alterations to the dealership premises or facilities, when to do so would be unreasonable, orwithoutwrittenassuranceofasufficient supplyofnewmotor vehicles so as to justify such an expansion, in light of the current market and economic conditions.
"(12) To require, coerce, or attempt to coerce any new motor vehicle dealer in this State to change location of the dealership, or to make any substantial alterations to the dealership premises or facilities, when to do so would be unreasonable, orwithoutwrittenassuranceofasufficient supplyofnewmotor vehicles so as to justify such an expansion, in light of the current market and economic conditions.dealership." SECTION 4.(b) G.S.
If a dealer is required bythe manufacturer to change the location of the dealership and has not sold its existing dealership facility and real estatewithin90days oflistingthepropertyfor sale,then,uponthewritten request of the dealer, the manufacturer shall purchase the dealer's existing dealership facility and real estate at its fair market value as determined by an independent appraiser agreed upon by the dealer and manufacturer.
20-305 is amended by adding a new subdivision to read:
If a manufacturer or distributor purchases a dealership facilityand real estate, then it shall beentitledtosole ownership, possession, use, and control of anyitems, buildings, or property that were included in the contract to purchase." GRANDFATHER EXTENSION SECTION 5.
"(12a) To require, coerce, or attempt to coerce any new motor vehicle dealer in this State to make any substantial alterations to the dealership premises or facilities, when to do so would be unreasonable, or without written assurance of a sufficient supplyof new motor vehicles so as to justifysuch an expansion, in light of the current market and economic conditions." RELEASES/WAIVERS SECTION 5.
20-305(30) reads as rewritten:
20-305 is amended by adding a new subdivision to read:
"(30) To vary the price charged to any of its franchised new motor vehicle dealers located in this State for new motor vehicles based on the dealer's purchase of new facilities, supplies, tools, equipment, or other merchandise from the manufacturer, the dealer's relocation, remodeling, repair, or renovation of existing dealerships or construction of a new facility, the dealer's participation in training programs sponsored, endorsed, or recommended by the manufacturer, whether or not the dealer is dualed with one or more other line makes of new motor vehicles, or the dealer's sales penetration.
"(13a) To enter into any release or waiver of rights created under this Article with one of its franchised dealers in this State unless the release or waiver of rights complies with all of the following:
Except as provided in this subdivision, it shall be unlawful for anymanufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative whatsoever of any of them to vary the price charged to anyof its franchised new motor vehicle dealers located in this State for new motor vehicles based on the dealer's sales volume, the dealer's level of sales or customer service satisfaction, the dealer's purchase of advertising materials, signage, nondiagnostic computer hardware or software, communications devices, or furnishings, or the dealer's participation in used House Bill 403-Second Edition Page 9 General Assembly Of North Carolina Session 2021 motor vehicle inspection or certification programs sponsored or endorsed by the manufacturer.
The price of the vehicle, for purposes of this subdivision shall include the manufacturer's useof rebates,credits, orotherconsideration that has theeffect of causing a variance in the price of new motor vehicles offered to its franchised dealers located in the State.
Notwithstanding the foregoing, nothing in this subdivision shall be deemed to preclude a manufacturer from establishing sales contests or promotions that provide or award dealers or consumers rebates or incentives;
provided, however, that the manufacturer complies with all of the following conditions:
With respect to manufacturer to consumer rebates and incentives, the manufacturer's criteria for determining eligibility shall:
The dealer's release or waiver of rights would not release or waive any rights relating to any provision contained in this Article which specifically provides that the dealer's rights are nonreleasable or nonwaivable;
1.
Permit all of the manufacturer's franchised new motor vehicle dealers in this State to offer the rebate or incentive;
and 2.
Be uniformly applied and administered to all eligible consumers.
With respect to manufacturer to dealer rebates and incentives, the rebate or incentive program shall:
The dealer's release or waiver of rights relates to an actual, active, and current claim or dispute between a manufacturer and a dealer and is in no part prospective;
1.
c.
Be based solelyon the dealer's actual or reasonably anticipated sales volume or on a uniform per vehicle sold or leased basis;
The specific wording of the dealer's release or waiver of rights does not cause the dealer to release or waive any rights the dealer may have underthis Article thatare not directlyrelatedto resolution ofan actual, active, and current claim or dispute between the dealer and manufacturer;
2.
d.
Be uniformly available, applied, and administered to all of the manufacturer's franchised new motor vehicle dealers in this State;
The dealer's release or waiver of rights is contained in a standalone document that is executed by an authorized owner or officer of the dealer and contains or references no other matters or issues other than facts and terms of settlement directly related to the resolution of the specific issues that comprise an actual, active, and current claim or dispute between the manufacturer and a dealer;
and 3.
e.
Provide that any of the manufacturer's franchised new motor vehicle dealers in this State may, upon written request, obtain themethodorformulausedbythemanufacturerin establishing the sales volumes for receiving the rebates or incentives and the specific calculations for determining the required sales volumes of the inquiring dealer and any of the manufacturer's other franchised new motor vehicle dealers located within 75 miles of the inquiring dealer.
The dealer's release or waiver of rights would not require any dispute between the manufacturer and dealer related to its interpretation or eitheroftheparties'performanceorbreachto be referredto anyperson Page 10 House Bill 403-First Edition General Assembly Of North Carolina Session 2021 other than the duly constituted courts of the State or the United States of America, or to the Commissioner, if such referral would be binding upon the dealer;
Nothing contained in this subdivision shall prohibit a manufacturer from providing assistance or encouragement to a franchised dealer to remodel, renovate, recondition, or relocate the dealer's existing facilities, provided that this assistance, encouragement,orrewardsare not determined on a per vehicle basis.
and f.
It is unlawful for any manufacturer to charge or include the cost of any program or policy prohibited under this subdivision in the price of new motor vehicles that the manufacturer sells to its franchised dealers or purchasers located in this State.
The dealer's release or waiver of rights is supported by adequate and reasonable consideration from the manufacturer that is fully disclosed in the release or waiver of rights itself and is negotiated and agreed to by both the dealer and manufacturer without any threats, coercion, or undue influence.
In the event that as of October 1, 1999, a manufacturer was operating a program that varied the price charged to its franchised dealers in this State in a manner that would violate this subdivision, or had in effect a documented policy that had been conveyed to its franchised dealers in this State and that varied the price charged to its franchised dealers in this State in a manner that would violate this subdivision, it shall be lawful for that program or policy, including amendments to that program or policy that are consistent with the purpose and provisions of the existing program or policy, or a program or policysimilar thereto implemented after October 1, 1999, to continue in effect Page 10 House Bill 403-Second Edition General Assembly Of North Carolina Session 2021 as to the manufacturer's franchised dealers located in this State until June 30, 2022.2024.
This subdivision shall be strictly construed, and a dealer's release or waiver of rights that fails to comply with any of the requirements or other provisions contained in sub-subdivisions a.through f.
In the event that as of June 30, 2001, a manufacturer was operating a program that varied the price charged to its franchised dealers in this State in a manner that would violate this subdivision, or had in effect a documented policy that had been conveyed to its franchised dealers in this State and that varied the price charged to its franchised dealers in this State in a manner that would violate this subdivision, and the program or policywas implemented in this State subsequent to October 1, 1999, and prior to June 30, 2001, and provided that the program or policy is in compliance with this subdivision as it existed as of June 30, 2001, it shall be lawful for that program or policy, including amendments to that program or policy that comply with this subdivision as it existed as of June 30, 2001, to continue in effect as to the manufacturer's franchised dealers located in this State until June 30, 2022.2024.
ofthis subdivision shall benull and void." MINIMUM VEHICLE ALLOCATION SECTION 6.
Any manufacturer shall be required to pay or otherwise compensate any franchise dealer who has earned the right to receive payment or other compensation under a program in accordance with the manufacturer's program or policy.
The provisions of this subdivision shall not be applicable to multiple or repeated sales of new motor vehicles made by a new motor vehicle dealer to a single purchaser under a bona fide fleet sales policy of a manufacturer, factory branch, distributor, or distributor branch." MINIMUM VEHICLE ALLOCATION SECTION 6.
Additionally, except as may be required by any consent decree of the Commissioner or other order of the Commissioner or court of competent jurisdiction, any sales objectives which a manufacturer, factory branch, distributor, or distributor branch establishes for any of its franchised dealers in this State must be reasonable, and everymanufacturer,factorybranch,distributor,ordistributorbranch must allocateitsproductswithinthisStateinamannerthatdoesallofthefollowing:
Additionally, except as may be required by any consent decree of the Commissioner or other order of the Commissioner or court of competent jurisdiction, any sales objectives which a manufacturer, factory branch, distributor, or distributor branch establishes for any of its franchised dealers in this State must be reasonable, and everymanufacturer,factorybranch,distributor,ordistributorbranchmust allocateitsproductswithinthisStateinamannerthatdoesallofthefollowing:
Provides each of its franchised dealers in this State an adequate supply of vehicles byseries, product line, and model in a fair, reasonable, and equitable manner based on each dealer's historical selling pattern and House Bill 403-Second Edition Page 11 General Assembly Of North Carolina Session 2021 reasonable sales standards as compared to other same line-make dealers in the State.planning potential.
Provides each of its franchised dealers in this State an adequate supply of vehicles byseries, product line, and model in a fair, reasonable, and equitable manner based on each dealer's historical selling pattern and reasonable sales standards as compared to other same line-make dealers in the State.planning potential.
If, duringthe immediatelypreceding12 calendar months, a new motor vehicle dealer located in this State sold a total of 225 or fewer of any brand of new motor vehicles manufactured or distributed by a particular manufacturer or distributor, that manufacturer or distributor shall be required to allocate and deliver to the dealer within the following 60 days and on a model by model or series basis, no fewer than the number of new motor vehicles of each such model or series that dealer sold at retail during the immediately previous calendar month;
If, duringthe immediatelypreceding12 calendar months, a new motor vehicle dealer located in this State sold a total of 250 or fewer new motor vehicles manufactured or distributed by a particular manufacturer or distributor, that manufacturer or distributor shall be required to allocate to the dealer and deliver in a timely manner, monthly and on a model by model or series basis, no fewer than the number of new motor vehicles of each such model or series that dealer sold at retail during the immediately previous calendar month;
provided, however, that nothing contained in this subdivision or in any franchise shall prevent or prohibit any dealer from refusing toacceptalloranyportionofanyallocationofvehiclesmadeavailable to the dealer by the manufacturer or distributor pursuant to this subdivision to the extent that accepting additional inventory would cause the dealer to exceed the dealer's floor plan allowance.
provided, however, that nothingcontained in this subdivision or in any House Bill 403-First Edition Page 11 General Assembly Of North Carolina Session 2021 franchise shall prevent or prohibit any dealer from refusing to accept all or any portion of any allocation of vehicles made available to the dealer by the manufacturer or distributor pursuant to this subdivision.
Provides each of its franchised dealers in this State a process that allows a dealer to appeal the dealer's vehicle allocation if the dealer believes it was not allocated or did not receive vehicle inventory in a manner that complies with both this section and the manufacturer's or distributor's allocation formula.
In order to comply with this section, the appeal process established by a manufacturer or distributor must include both manufacturer representatives and dealer representatives.
h.
The willful or malicious maintenance, creation, or alteration of a vehicle allocation process orformulabyamanufacturer,factorybranch,distributor,ordistributorbranch that is in any part designed or intended to force or coerce a dealer in this State to close or sell the dealer's franchise, cause the dealer financial distress, or to relocate, update, or renovate the dealer's existing dealership facility shall constitute an unfair and deceptive trade practice under G.S.
The willful or malicious maintenance, creation, or alteration of a vehicle allocation process orformulabyamanufacturer,factorybranch,distributor,ordistributor branch that is in any part designed or intended to force or coerce a dealer in this State to close or sell the dealer's franchise, cause the dealer financial distress, or to relocate, update, or renovate the dealer's existing dealership facility shall constitute an unfair and deceptive trade practice under G.S.
"(33) Tofail to reimburse a dealerlocatedin this State in full fortheactual cost cost, including applicable taxes and third-party fees, of providing a loaner or rental vehicle to any customer who is having a vehicle serviced at the dealership if theprovisionofsuchaloanerorrentalvehicleisrequiredbythemanufacturer.
"(33) Tofail to reimburse a dealerlocatedin this State in full fortheactual cost cost, including applicable taxes and third-party fees, of providing a loaner or rental vehicle to any customer who is having a vehicle serviced at the dealership if the provision of such a loaner or rental vehicle is required by the manufacturer.is either required by the manufacturer, or if the manufacturer has represented or otherwise indicated to the customer that a loaner or rental vehicle will be provided or that the customer is entitled to a loaner or rental vehicle.
It is unlawful for a manufacturer to fail to reimburse the dealer in full as provided above (i) whether or not the dealer provides the customer with a model vehicle similar to the vehicle the customer brought in for service, in the event the dealer does not have a similar model loaner or rental vehicle available, or (ii) in the event that all or any portion of the time the dealer has Page 12 House Bill 403-Second Edition General Assembly Of North Carolina Session 2021 provided the customer with a loaner or rental vehicle is due to the unavailability of one or more parts sold or distributed by the manufacturer or through a supplier designated or approved by the manufacturer." 5 FACILITY EXPENDITURES SECTION 8.
It is unlawful for a manufacturer to fail to reimburse the dealer in full as provided above (i) whether or not the dealer provides the customer with a model vehicle similar to the vehicle the customer brought in for service, in the event the dealer does not have a similar model loaner or rental vehicle available, or (ii) in the event that all or any portion of the time the dealer has provided the customer with a loaner or rental is due to the unavailability of one or more parts." FACILITY EXPENDITURES SECTION 8.
If a manufacturer, factory branch, distributor, or distributor branch offers incentives, or other payments under a program that are in any part conditioned on a dealer's construction of a new facility, facility improvements, or installation of signs or other image elements,adealerthatconstructedanewfacility,madefacilityimprovements, or installed signs or other image elements required by or approved by the manufacturer that were completed at a cost of more than two hundred fifty thousand dollars ($250,000), indexed to the Consumer Price Index, within the preceding 10 years shall be deemed to be in compliance with any applicable facility requirements included in the manufacturer's program, and the dealer shall be entitled to receive all such incentives or other payments awardable under the program.
If a manufacturer, factory branch, distributor, or distributor branch offers incentives, or other payments under a program that are in any part conditioned on a dealer's construction of a new Page 12 House Bill 403-First Edition General Assembly Of North Carolina Session 2021 facility, facility improvements, or installation of signs or other image elements,adealerthatconstructedanewfacility,madefacilityimprovements, or installed signs or other image elements required by or approved by the manufacturer that were completed at a cost of more than two hundred fifty thousand dollars ($250,000), indexed to the Consumer Price Index, within the preceding 10 years shall be deemed to be in compliance with the manufacturer's new or successor program requirements, and the dealer shall be entitled to receive all such incentives or other payments awardable under the new or successor program.
If, during the 10-year period, the manufacturer revises or discontinues an existing program, standard, or policy or establishes a new program, standard, or policy or other benefit relating to construction or substantial alteration of a dealership, a motor vehicle dealer that completed construction or alteration of a dealership at a cost of more than two hundred fifty thousand dollars ($250,000) as part of a prior program, standard, or policy and elects not to participate in the new or revised program, standard, or policy shall not be entitled to the facility bonus incentive portion of the new or revised program but shall remain entitled to all facility benefits under the prior program, standard, or policyaccordingto the terms of the prior program, standard, or policy.
For any dealer that did not change the location of its dealership or make substantial alterations to its dealership premises or facilities within the preceding 10 years at a cost of more than two hundred fifty thousand dollars ($250,000), indexed to the Consumer Price Index, the dealer's obligation to change location of its dealership, or to make any substantial alteration to its dealership premises or facilities, at the request of a manufacturer, factory branch, distributor, or distributor branch, or to satisfy a requirement or condition of an incentive program sponsored by a manufacturer, factory branch, distributor, or distributor branch, shall be governed by the applicable provisions of subdivisions (4), (11), (12), (25), (30), (32), and (42) of this section.
If the prior program, standard, or policy under which the dealercompletedaconstructionoralterationdoesnotcontainaspecificperiod of time during which the manufacturer or distributor must provide payments or benefits to a dealer, then the manufacturer or distributor may not deny the dealer payment or benefits under the terms of that prior program, as it existed when the dealer began to perform under the prior program, for the balance of the 10-year term, regardless of whether the manufacturer's or distributor's program, standard, or policy has been revised or discontinued.
This section shall not apply to any facility or premises improvement or alteration that is voluntarily agreed to by the new motor vehicle dealer and for which the dealer receives facilities-related compensation from the manufacturer or distributor for the facility improvement or alteration equivalent to at least a majority of the cost incurred by the dealer for the facility improvement or alteration." WARRANTY REQUIREMENTS SECTION 9.
For any dealer that did not change the location of its dealership or make substantial alterations to its dealershippremises orfacilitieswithin thepreceding10 years at a cost of more than two hundred fifty thousand dollars ($250,000), indexed to the Consumer Price Index, the dealer's obligation to change location of its dealership, or to make any substantial alteration to its dealership premises or facilities, at the request of a manufacturer, factory branch, distributor, or House Bill 403-Second Edition Page 13 General Assembly Of North Carolina Session 2021 distributor branch, or to satisfy a requirement or condition of an incentive program sponsored by a manufacturer, factory branch, distributor, or distributor branch, shall be governed by the applicable provisions of subdivisions (4), (11), (12), (25), (30), (32), and (42) of this section.
This section shall not apply to any facility or premises improvement or alteration that is voluntarilyagreed to bythe new motor vehicle dealer and for which the dealer receives facilities-related compensation from the manufacturer or distributor for the facility improvement or alteration equivalent to at least a majority of the cost incurred by the dealer for the facility improvement or alteration." WARRANTY REQUIREMENTS SECTION 9.
(a) Each motor vehicle manufacturer, factory branch, distributor or distributor branch, shall specify in writing to each of its motor vehicle dealers licensed in this State the dealer's obligations for preparation, delivery, warranty, manufacturer-sponsored maintenance programs, manufacturer extended warranty, parts exchange programs, and recall service on its products.
(a) Each motor vehicle manufacturer, factory branch, distributor or distributor branch, shall specify in writing to each of its motor vehicle dealers licensed in this State the dealer's obligations for preparation, delivery, warranty, manufacturer-sponsored maintenance programs, manufacturer extended warranty, goodwill repairs, parts exchange programs, and recall service on its products.
In no event shall the schedule of compensation fail to include reasonable compensation for diagnostic work work, shipping, if required by the manufacturer or distributor, and for battery disposal or other disposal charges and all other associated fees that were actually incurred by the dealer, and associated administrative requirements as well as repair service and labor.
In no event shall the schedule of compensation fail to include reasonable compensation for diagnostic work work, battery disposal or other disposal charges and shipping and all other associated fees, and associated administrative requirements as well as repair service and labor.
The compensation paid under this section shall be reasonable, provided, however, that under no circumstances shall the reasonable compensation under this section for warranty and recall service be in an amount less than the dealer's current retail labor rate and the amount charged to retail customers for the manufacturer's or distributor's original parts for nonwarranty work of like kind, provided the amount is competitive with the retail rates charged for parts and labor by other franchised dealers of the same line-make located within the dealer's market.
The compensation paid under this section shall be reasonable, provided, however, that under no circumstances shall the reasonable compensation under this section for warranty and recall service be in an amount less than the dealer's current retail labor rate and the amount charged to retail customers for the manufacturer's or distributor's original parts for nonwarranty work of like kind, provided the amount is competitive with the retail rates charged for parts and labor byother franchised dealers of the same line-make located within the dealer's market.
If there is no other same line-make dealer located in the dealer's market or if all other same line-make dealers in the dealer's market are owned or operated bythe same entities or individuals as the dealership being compared, the retail rates charged for parts and labor by other franchised dealers located in the dealer's market that sell competing line-make motor vehicles as the dealer may be considered when determining whether the dealer's rates are competitive.
If there is no other same line-make dealer located in the dealer's market or if all other same line-make dealers in the dealer's market are owned or operated by the same entities or individuals as the dealership being compared, the retail rates charged for parts and labor by other franchised dealers located in the dealer's market that sell competing line-make motor vehicles as the dealer may be considered when determining whether the dealer's rates are competitive.
(a1) The retail rate customarily charged by the dealer for parts and labor may be established at the election of the dealer bythe dealer submitting to the manufacturer or distributor 100 sequential nonwarranty customer-paid service repair orders which contain warranty-like parts, or 60 consecutive days of nonwarranty customer-paid service repair orders which contain warranty-like parts, whichever is less, covering repairs made no more than 180 days before the submission and declaring the average percentage markup.
House Bill 403-First Edition Page 13 General Assembly Of North Carolina Session 2021 (a1) The retail rate customarily charged by the dealer for parts and labor may be established at the election of the dealer bythe dealer submitting to the manufacturer or distributor 100 sequential nonwarranty customer-paid service repair orders which contain warranty-like parts, or 60 consecutive days of nonwarranty customer-paid service repair orders which contain warranty-like parts, whichever is less, covering repairs made no more than 180 days before the submission and declaring the average percentage markup.
The average of the parts markup rate and the average labor rate shall both be presumed to be reasonable, however, a manufacturer or distributor may, not later than 30 days after submission, rebut that presumption by reasonably substantiating that the rate is unfair and unreasonable in light of the retail rates charged for parts and labor by all other franchised motor vehicle dealers located in the dealer's market relevant market area offering the same line-make vehicles.
The average of the parts markup rate and the average labor rate shall both be presumed to be reasonable, however, a manufacturer or distributor may, not later than 30 days after submission, rebut that presumption by reasonably substantiating that the rate is unfair and unreasonable in light of the retail rates charged for parts and labor by all other franchised motor vehicle dealers located in the dealer's market cityor town offering the same line-make vehicles.
In the event there are no other franchised dealers offering the same line-make of vehicle in the dealer's market, relevant market area, the manufacturer or distributor may compare the dealer's retail rate for parts and labor with the retail Page 14 House Bill 403-Second Edition General Assembly Of North Carolina Session 2021 rates charged for parts and labor by other same segment franchised dealers who are selling competing line-makes of vehicles within the dealer's market.
In the event there are no other franchised dealers offering the same line-make of vehicle in the dealer's market, cityor town, the manufacturer or distributor may compare the dealer's retail rate for parts and labor with the retail rates charged for parts and laborbyothersamesegment franchiseddealerswhoareselling competingline-makes ofvehicles within the dealer's market.
relevant market area.
city or town.
If such a protest is filed, the Commissioner shall inform the manufacturer or distributor that a timelyprotest has been filed and that a hearing will be held on such protest.
If such a protest is filed, the Commissioner shall inform the manufacturer or distributor that a timely protest has been filed and that a hearing will be held on such protest.
In any hearing held pursuant to this subsection, the manufacturer or distributor shall have the burden of proving by a preponderance of the evidence that the rate declared bythe dealer was unreasonable as described in this subsection and that the proposed adjustment of the average percentage markup is reasonable pursuant to the provisions of this subsection.
In anyhearing held pursuant to this subsection, the manufacturer or distributor shall havetheburden ofprovingbyapreponderanceoftheevidencethat theratedeclared bythedealer was unreasonable as described in this subsection and that the proposed adjustment of the average percentage markup is reasonable pursuant to the provisions of this subsection.
20-4.01(32b), at the prevailing retail rate according to the factors in subsection (a) of this section, or, in service in accordance with the schedule of compensation provided the dealer pursuant to subsection (a) of this section, or to otherwise recover all or any portion of its costs for compensating its motor vehicle dealers licensed in this State for warranty or recall parts and service or for payments for a qualifying used motor vehicle pursuant to subsections (i) and (j) of this section either by reduction in the amount due to the dealer, or by separate charge, surcharge, or other imposition, and to fail to indemnify and hold harmless its franchised dealers licensed in this State against any judgment for damages or settlements agreed to by the manufacturer, including, but not limited to, court costs and reasonable attorneys' fees of the motor vehicle dealer, arising out of complaints, claims or lawsuits including, but not limited to, strict liability, negligence, misrepresentation, express or implied warranty, or recision orrevocationof acceptanceofthe sale of a motorvehicle as defined in G.S.
20-4.01(32b), at the prevailing retail rate according to the factors in subsection (a) of this section, or, in service in accordance with the schedule of compensation provided the dealer pursuant to subsection (a) of this section, or to otherwise recover all or any portion of its costs for compensating its motor vehicle dealers licensed in this State for warranty or recall parts and service or for payments for a qualifying used motor vehicle pursuant to subsections (i) and (j) of this section either by reduction in the amount due to the dealer, or by separate charge, surcharge, or other imposition, and to fail to indemnify and hold harmless its franchised dealers licensed in this State against any judgment for damages or settlements agreed to by the manufacturer, including, but not limited to, court costs and reasonable attorneys' fees of the motor vehicle dealer, arising out of complaints, claims or lawsuits including, but not limited to, strict liability, negligence, misrepresentation, express or Page 14 House Bill 403-First Edition General Assembly Of North Carolina Session 2021 implied warranty, or recision orrevocationof acceptanceofthe sale of a motorvehicle as defined in G.S.
Any audit, other than an audit conducted for cause, for sales incentives, service incentives, rebates, or other forms of incentive compensation may only be conducted one time within any 12-month period 24-month period and shall only be for the 12-month period House Bill 403-Second Edition Page 15 General Assembly Of North Carolina Session 2021 immediately following the date of the payment of the claim by the manufacturer, factory branch, distributor, or distributor branch pursuant to a sales incentives program, service incentives program, rebate program, or other form of incentive compensation program.
Any audit, other than an audit conducted for cause, for sales incentives, service incentives, rebates, or other forms of incentive compensation may only be conducted one time within any 12-month period 24-month period and shall only be for the 12-month period immediately following the date of the payment of the claim by the manufacturer, factory branch, distributor, or distributor branch pursuant to a sales incentives program, service incentives program, rebate program, or other form of incentive compensation program.
(b1) All claims made by motor vehicle dealers pursuant to this section for compensation for delivery, preparation, warranty, and recall work, including compensation for a qualifying used motor vehicle in accordance with subsection (i) of this section, 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 either in accordance with the manufacturer's reasonable written procedures or by other reasonable means.
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.
Notwithstanding the foregoing, a manufacturer shall not fail to fully compensate a dealer for warranty or recall work or make any chargeback to the dealer's account based on the dealer's failure to comply with the manufacturer's claim documentation procedure or procedures unless House Bill 403-First Edition Page 15 General Assembly Of North Carolina Session 2021 both of the following requirements have been met:if the dealer has documented by other reasonable means.
(1) The dealer has, within the previous 12 months, failed to complywith the same specific claim documentation procedure or procedures;
and (2) The manufacturer has, within the previous 12 months, provided a written warning to the dealer by certified United States mail, return receipt requested, identifyingthespecific claim documentationprocedureorprocedures violated by the dealer.
Nothing contained in this subdivision shall be deemed to prevent or prohibit a manufacturer from adopting or implementing a policy or procedure which provides or allows for the self-audit of dealers, provided, however, that if any such self-audit procedure contains provisions relating to claim documentation, such claim documentation policies or procedures shall be subject to the prohibitions and requirements contained in this subdivision.
Notices sent by a manufacturer under a bona fide self-audit procedure shall be deemed sufficient notice to meet the requirements of this subsection provided that the dealer is given reasonable opportunity through self-audit to identify and correct any out-of-line procedures for a period of at least 60 days before the manufacturer conducts its own audit of the dealer warranty operations and procedures.
A manufacturer mayfurther 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, or by telephone, 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, or during the telephone call, 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 claims submitted by a group of other franchisees of the manufacturer, the manufacturer shall, at or prior to the meeting or telephone call with the dealer's representative, provide the dealer with a written statement containing the basis or methodology upon which the dealer was selected for audit or review.
For commission, money, or other thing of value, buys, sells, leases at retail, offers for subscription, or exchanges, whether outright or on conditional sale, bailment lease, chattel mortgage,orotherwise,fiveormoremotorvehicles withinany 12 consecutive months, regardless of who owns the motor vehicles.
For commission, money, or other thing of value, buys, sells, leases, offers for subscription, or exchanges, whether outright Page 16 House Bill 403-First Edition General Assembly Of North Carolina Session 2021 or on conditional sale, bailment lease, chattel mortgage, or otherwise, five or more motor vehicles within any 12 consecutive months, regardless of who owns the motor vehicles.
Page 16 House Bill 403-Second Edition General Assembly Of North Carolina Session 2021 3.
3.
Engages, wholly or in part, in the business of selling selling, leasing at retail, or offering for subscription new motor vehicles or new or used motor vehicles, or used motor vehicles only, whether or not the motor vehicles are owned by that person, and sells five or more motor vehicles within any 12 consecutive months.
Engages, wholly or in part, in the business of selling selling, leasing, or offering for subscription new motor vehicles or new or used motor vehicles, or used motor vehicles only, whether or not the motor vehicles are owned by that person, and sells five or more motor vehicles within any12 consecutive months.
Primarily engages in the leasing or renting of motor vehicles to others and sells or offers to sell those vehicles at retail." DEALERSHIP FINANCIAL STATEMENTS SECTION 11.
Primarily engages in the leasing or renting of motor vehicles to others and sells or offers to sell those vehicles at retail." DEALERSHIP FINANCIAL STATEMENTSREQUIREDNOMORE THANONCE PER QUARTER SECTION 11.
A manufacturer shall not require, or include in any incentive program, a requirement that any of its motor vehicle dealers in this State provide an exclusive financial statement for a franchise or line make when the dealer company operates more than one franchise or sells more than one line make." SEVERABILITY CLAUSE SECTION 12.
A manufacturer shall not require, or include in any incentive program, a requirement that any of its motor vehicle dealers in this State provide (i) a financial statement more than once per calendar quarter or (ii) an exclusive financial statement for a franchise when the dealer company operates more than one franchise." SEVERABILITY CLAUSE SECTION 12.
House Bill 403-Second Edition Page 17
House Bill 403-First Edition Page 17
View plain text versions (6)

Action History

  1. Signed by Gov. 9/10/2021

  2. Ch. SL 2021-147

  3. Ratified

  4. Pres. To Gov. 9/1/2021

  5. Cal Pursuant 36(b)

  6. Added to Calendar

  7. Concurred In S Com Sub

  8. Ordered Enrolled

  9. Regular Message Sent To House

  10. Regular Message Received For Concurrence in S Com Sub

  11. Passed 2nd Reading

  12. Passed 3rd Reading

  13. Reptd Fav

  14. Reptd Fav Com Substitute

  15. Com Substitute Adopted

  16. Re-ref Com On Rules and Operations of the Senate

  17. Withdrawn From Com

  18. Re-ref to Commerce and Insurance. If fav, re-ref to Rules and Operations of the Senate

  19. Regular Message Received From House

  20. Passed 1st Reading

  21. Ref To Com On Rules and Operations of the Senate

  22. Regular Message Sent To Senate

  23. Passed 2nd Reading

  24. Passed 3rd Reading

  25. Reptd Fav Com Substitute

  26. Re-ref Com On Rules, Calendar, and Operations of the House

  27. Reptd Fav

  28. Cal Pursuant Rule 36(b)

  29. Placed On Cal For 05/06/2021

  30. Passed 1st Reading

  31. Ref to the Com on Transportation, if favorable, Rules, Calendar, and Operations of the House

  32. Filed

Sponsors

Sponsorship breakdown

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1 sponsors · 2 co-sponsors · 176 not signed on

Sponsors (1)

Co-sponsors (2)

Not signed on (176)

176 members have not signed on to this bill.

Show all 176 →

"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Votes

M11 Concur

Passed 104 Yea · 0 Nay · 16 Other
Party YeaNayPresentNot Voting
Democratic 24003
Unaffiliated 38006
U 1001
Republican 41006
Total 1040016
% of votes cast 87%0%0%13%
How each member voted (120)
Member Party Vote
Autry — Yea
Clemmons — Yea
Cooper-Suggs — Yea
Farkas — Yea
Gailliard — Yea
Garrison — Yea
Gill — Yea
Graham — Yea
Harris — Yea
Hunt — Yea
Hunter — Yea
Hurtado — Yea
Insko — Yea
Lucas — Yea
Terry — Yea
vonHaefen — Yea
Wray — Yea
Boles — Yea
Cleveland — Yea
Davis — Yea
Faircloth — Yea
Hardister — Yea
Hurley — Yea
Johnson — Yea
McElraft — Yea
McNeill — Yea
Mills — Yea
Moore — Yea
Rogers — Yea
Saine — Yea
Sasser — Yea
Szoka — Yea
Yarborough — Yea
Zachary — Yea
Fisher — Not Voting
Martin — Not Voting
Richardson — Not Voting
Bradford — Not Voting
Bumgardner — Not Voting
Elmore — Not Voting
C. Smith — Yea
K. Baker — Yea
K. Smith — Yea
R. Smith — Yea
Abe Jones Democratic Yea
Allison A. Dahle Democratic Yea
Amber M. Baker Democratic Not Voting
Amos L. Quick, III Democratic Yea
Becky Carney Democratic Yea
Brandon Lofton Democratic Yea
Brian Turner Democratic Yea
Carolyn G. Logan Democratic Yea
Cecil Brockman Democratic Not Voting
Cynthia Ball Democratic Yea
Dante Pittman Democratic Yea
Deb Butler Democratic Yea
Eric Ager Democratic Yea
Gale Adcock Democratic Yea
Garland E. Pierce Democratic Yea
Graig Meyer Democratic Yea
James Roberson Democratic Yea
Joe John Democratic Yea
Marcia Morey Democratic Yea
Mary Belk Democratic Not Voting
Pricey Harrison Democratic Yea
Robert T. Reives, II Democratic Yea
Shelly Willingham Democratic Yea
Terence Everitt Democratic Yea
Terry M. Brown Jr. Democratic Yea
Vernetta Alston Democratic Yea
Zack Hawkins Democratic Yea
A. Reece Pyrtle, Jr. Republican Yea
Ben T. Moss, Jr. Republican Yea
Bobby Hanig Republican Yea
Brenden H. Jones Republican Yea
Charles W. Miller Republican Yea
Chris Humphrey Republican Yea
David Willis Republican Yea
Dean Arp Republican Yea
Dennis Riddell Republican Yea
Destin Hall Republican Yea
Diane Wheatley Republican Yea
Donna McDowell White Republican Yea
Donny Lambeth Republican Yea
Dudley Greene Republican Yea
Edward C. Goodwin Republican Yea
Erin Paré Republican Yea
Frank Iler Republican Yea
Harry Warren Republican Yea
Howard Penny, Jr. Republican Yea
Hugh Blackwell Republican Yea
Jay Adams Republican Not Voting
Jeff Zenger Republican Yea
Jeffrey C. McNeely Republican Yea
Jimmy Dixon Republican Yea
John A. Torbett Republican Yea
John R. Bell, IV Republican Yea
John Sauls Republican Yea
Julia C. Howard Republican Yea
Karl E. Gillespie Republican Yea
Keith Kidwell Republican Not Voting
Kelly E. Hastings Republican Yea
Kyle Hall Republican Yea
Larry C. Strickland Republican Yea
Larry W. Potts Republican Yea
Mark Brody Republican Not Voting
Mark Pless Republican Yea
Matthew Winslow Republican Yea
Mike Clampitt Republican Yea
Mitchell S. Setzer Republican Not Voting
Phil Shepard Republican Yea
Ray Pickett Republican Yea
Sam Watford Republican Not Voting
Sarah Stevens Republican Yea
Steve Tyson Republican Yea
Timothy D. Moffitt Republican Yea
W. Ted Alexander Republican Not Voting
William D. Brisson Republican Yea
Carla D. Cunningham U Not Voting
Nasif Majeed U Yea

Official roll call →

Second Reading

Passed 41 Yea · 0 Nay · 9 Other
Party YeaNayPresentNot Voting
Democratic 10003
Unaffiliated 15003
Republican 16002
Total 41008
% of votes cast 84%0%0%16%
How each member voted (49)
Member Party Vote
deViere — Yea
Fitch — Yea
Foushee — Yea
Marcus — Yea
Nickel — Yea
Woodard — Yea
Ballard — Yea
Edwards — Yea
Johnson — Yea
Krawiec — Yea
Perry — Yea
Proctor — Yea
Steinburg — Yea
Bazemore — Not Voting
Harrington — Not Voting
D. Davis — Not Voting
J. Jackson — Yea
P. Newton — Yea
Dan Blue Democratic Yea
DeAndrea Salvador Democratic Yea
Gladys A. Robinson Democratic Yea
Jay J. Chaudhuri Democratic Not Voting
Joyce Waddell Democratic Yea
Julie Mayfield Democratic Not Voting
Michael Garrett Democratic Yea
Mujtaba A. Mohammed Democratic Yea
Natalie S. Murdock Democratic Yea
Paul A. Lowe, Jr. Democratic Yea
Sarah Crawford Democratic Yea
Sydney Batch Democratic Not Voting
Tracy Clark Democratic Yea
Amy S. Galey Republican Yea
Bill Rabon Republican Not Voting
Brent Jackson Republican Yea
Carl Ford Republican Yea
Danny Earl Britt, Jr. Republican Yea
David W. Craven, Jr. Republican Yea
Kevin Corbin Republican Yea
Lisa S. Barnes Republican Yea
Michael A. Lazzara Republican Yea
Michael V. Lee Republican Yea
Norman W. Sanderson Republican Yea
Phil Berger Republican Yea
Ralph Hise Republican Yea
Steve Jarvis Republican Yea
Tom McInnis Republican Yea
Vickie Sawyer Republican Yea
W. Ted Alexander Republican Yea
Warren Daniel Republican Not Voting

Official roll call →

Subjects

Cross-referencing the record. Reading this bill against every other bill in the corpus by meaning, not keywords. Only the first open is slow. It’s instant for you after this. Matching · Ranking · Engrossing

Frequently asked questions

Who sponsors HB 403?
HB 403 is sponsored by Brenden H. Jones (Republican), Wray, and Mitchell S. Setzer (Republican).
What is the current status of HB 403?
This bill has been enacted into law. Introduced March 24, 2021. Enacted.
Where can I track HB 403?
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Last checked for changes 3 months ago · updated continuously

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