HB 1914 — Modifies provisions relating to franchisors' warranty duties to franchisees

SECOND REGULAR SESSION HOUSE COMMITTEE SUBSTITUTE FOR HOUSE BILL NO.

1914 103RD GENERAL ASSEMBLY INTRODUCED5454H.02C BYJOSEPH REPRESENTATIVEENGLER, CASTEEL.Chief Clerk AN ACT To repeal section 407.828, RSMo, and to enact in lieu thereof one new section relating to franchisor warranty duties.

5454H.01I JOSEPH ENGLER, Chief Clerk AN ACT To repeal section 407.828, RSMo, and to enact in lieu thereof one new section relating to franchisor warranty duties.

Notwithstanding any provision in a franchise to the contrary, each franchisor shall specify in writing to each of its franchisees in this state the franchisee's obligations for [preparation,preparation, delivery, and]and warranty service on its products.

[TheThe franchisor shall provide the franchisee with the schedule of compensation to be paid to the franchisee for parts, labor, and service, and the time allowance for the performance of the labor and service for the franchisee's obligations for preparation, delivery, [and] warranty, and warrantyrecall service.

2.[2.

In the determination of what constitutes reasonable compensation for labor and service pursuant to this section, the principal factor to be given consideration shall be the prevailing wage rates being charged for similar labor and service by the franchisee for similar labor and service to retail customers for nonwarranty labor and service.]service. The franchisor shall compensate the franchisee for EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law.

the primary factor in determining reasonable compensation EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law.

HCS HB 1914 2 warrantyfor service parts andunder laborthis requiredsection ofshall be the franchiseeamount charged by the franchisorfranchisee underfor thesimilar provisionsparts ofto thisretail section.customers for nonwarranty parts.] 2.

2.(1) Fair and reasonable compensation requires the franchisor to pay each franchisee no less than the amount the retail customer pays for the same services with regard to rate and time.

CompensationAny schedule of compensation previously agreed to by the franchisor and the franchisee for partsextended warranty repairs may be used in warrantylieu serviceof shallactual betime reasonable.expended.

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AIn franchisorno mayevent requestshall such documentationcompensation asfail is reasonable from the franchisee to substantiateinclude thefull amountcompensation charged by the franchisee for partsdiagnostic usedwork, inas nonwarrantywell repairs,as butrepair aservice, franchisorlabor, shalland notparts. request documentation of a type or amount that is unduly or unnecessarily burdensome to the franchisee.

CompensationTime allowances for laborthe useddiagnosis in warranty service shall be reasonable and mayperformance be determined at the election of thewarranty dealerwork asand describedservice inshall subsectionbe 3no ofless thisthan sectionwhat inis lieucharged ofto anyretail laborcustomers compensationfor schedulethe prescribedsame bywork theto franchisor.be performed.

The primary factor in determining reasonable compensation for parts under this section shall be the amount charged by the franchisee for similar parts to retail customers for nonwarranty parts.

No warranty or factory compensated repairs shall be excluded from this requirement, including recalls or other voluntary stop-sell repairs required by the franchisor.

If a franchisor is required to issue a recall, the franchisee will be compensated for labor time as above stated.

(2) Service technicians and other associated service department personnel performing work for franchisees and subject to the increased labor time provisions of this section shall be compensated in accordance with their established pay plan, with compensation adjusted to reflect the increased time allowance.

(3) Franchisors shall pay the franchisee the same effective labor rate that the franchisee receives for customer-pay repairs.

This requirement includes vehicle diagnostic times for all warranty repairs.

Additionally, if a technician is required to communicate with a technical assistance center, engineering, or some other external franchisor source in order to provide a warranty repair, the franchisor shall pay for the time from start of communications until the communication is complete.

(4) The franchisee may submit a request to the franchisor for warranty labor rate increases a maximum of once per calendar year.

Any claim made by a franchisee, including claims for additional compensation in specific instances of warranty or recall repairs under this section shall be either approved or disapproved within twenty days after the claim is submitted to the franchisor in the manner and on the forms the franchisor reasonably prescribes.

An approved claim shall be paid within twenty days after its approval.

If a claim is not specifically disapproved in writing or by electronic transmission within twenty days after the date on which the franchisor receives it, the HCS HB 1914 3 claim shall be deemed approved and payment shall follow within twenty days.

No franchisor shall require a franchisee to submit a claim authorized under this section sooner than thirty days after the franchisee completes the preparation, delivery, warranty, or recall service authorizing the claim for preparation, delivery, warranty, or recall service.

(5) A franchisor or distributor shall not otherwise recover its costs from franchisees within this state, including an increase in the wholesale price of a vehicle or surcharge imposed on a franchisee solely intended to recover the cost of reimbursing a franchisee for parts and labor under this section, provided a franchisor or distributor shall not be prohibited from increasing prices for vehicles or parts in the normal course of business.

Compensation for warranty labor shall equal the dealer's labor rate for nonwarranty repairs multiplied by the time provided in whichever generally accepted industry labor time guide is used by the dealer for nonwarranty customer-paid service repair orders.

If no time guide exists for a warranty repair, compensation for warranty labor shall equal the dealer's nonwarranty labor rate being charged at the time the repair is completed multiplied by the time actually spent to complete the repair order and shall not be less than the time charged to retail customers for the same or similar work performed.

Compensation for warranty labor shall include all diagnostic time for repairs performed under this section including, but not limited to, all time spent communicating with the manufacturer's technical assistants or external manufacturer source in order to provide a warranty repair, and shall not be less than the time charged to retail customers for the same or similar work performed.

[3.] 4.

Compensation for parts and labor for recall repairs shall be determined under [subsectionsubsection 2]2 the provisions of this section.

[4.]5.If a franchisor imposes a recall or stop sale on any new vehicle in a franchisee's inventory that prevents the sale of the vehicle, the franchisor shall compensate the franchisee for any interest and storage until the vehicle is repaired and made ready for sale.

No[4. franchisor shall require a franchisee to submit a claim authorized under this section sooner than thirty days after the franchisee completes the [preparation, delivery, or] warranty service [authorizing the claim for preparation, delivery, or warranty service].

No franchisor shall require a franchisee to submit a claim authorized under this section sooner than thirty days after the franchisee completes the preparation, delivery, or warranty service authorizing the claim for preparation, delivery, or warranty service.

Any claims not specifically disapproved in writing HB 1914 3 within thirty days after the receipt of the form shall be considered [toto be]be approved and payment shall be made by the franchisor within fifteen days thereafter.

[5.]6.5.]4.

[6.] 7.5.

No franchisor shall require a franchisee to submit a claim authorized under [subsectionsubsection 5 of]of this section sooner than thirty days after the franchisee becomes eligible to submit the claim.

All claims made by a franchisee [pursuantpursuant to subsection 5 of this section]section underfor thisHCS sectionHB for1914 4 promotion events, including but not limited to rebates, programs, or activities shall be paid within ten days after their approval.