Pub. 7 2017 Issue 4

14 AUTOMOBILE DEALER NEWS ILLINOIS www.illinoisdealers.com A TALE OF TWO BILLS T o borrow from Charles Dickens, the 2017 Spring Legislative Session was the best of times and the worst of times for Illinois motor vehicle dealers when it comes to significant legislation affecting the dealer body. Two bills that directly impact motor vehicle dealers were signed into law earlier this year. The first helps to level the playing f ield between motor vehicle dealers and manufacturers by making several important updates to the Illinois Motor Vehicle Franchise Act. The second creates a new used vehicle warranty and imposes new compliance obligations on motor vehicle dealers. The Best of Times IADA-promoted legislation to update the Illinois Motor Vehicle Franchise Act was signed into law by Governor Bruce Rauner on August 24th. Public Act 100 -308, sponsored by Senator Martin Sandoval and Representative John D’Amico, makes several important updates to the Franchise Act. The legislation prevents amanufacturer from penalizing a dealer if the dealer sells a new vehicle to a customer and the customer immediately exports the vehicle out of the county, unless the manufacturer can show that the dealer knew that the customer intended to ship the vehicle out of the county. Many dealer agreements permit the manufacturer to charge back incentive payments to dealers or impose other penalties on dealers if a new vehicle customer immediately ships a vehicle out of the United States. In most of those cases, the selling dealer completes title and registration paperwork showing a U.S address and the dealer has no indication that the customer is going to immediately ship the vehicle out of the country. P.A. 100-308 levels the playing field by putting the burden on the manufacturer to show that the dealer knew or should have known that the customer planned to ship the vehicle out of the county. Many manufacturers like to spend their dealers’ money by requiring frequent, costly dealership remodeling upgrades. P.A. 100-308 permits dealers to get some return on their investments by prohibiting a manufacturer from requiring a dealer to undertake a substantial alteration of the dealership facilities more than once every 10 years. Furthermore, a remodeling incentive program cannot force a dealer to purchase building materials from a vendor specified by the manufacturer if the dealer can find substantially similar materials from another vendor at a lower cost, unless the manufacturer is willing to pay the cost difference between the vendor selected by themanufacturer and the vendor chosen by the dealer. Similarly, a manufacturer that leases signage and other image and design elements to dealers must give the dealer the option to purchase those items from a vendor selected by the dealer if those items conform to the manufacturer’s intellectual property usage guidelines. Public Act 100-308 also levels the playing field when a manufacturer invokes its right of first refusal on a dealership buy/ sell to make sure that that manufacturer gives the selling dealer timely notice that the manufacturer is exercising its right of first refusal and pays the selling dealer equal consideration to what the dealer would have received from the original purchaser, including the purchase or lease of the selling dealer’s real property. If a manufacturer invokes its right of first refusal, it must also reimburse the proposed buyer for its reasonable expenses resulting from the purchaser’s attempt to purchase the dealership. Finally, when a manufacturer attempts to terminate a dealer, P.A. 100 -308 requires the manufacturer to consider local factors in the dealer’s market area. The dealer performance models used by most manufacturers compare the performance of a dealer slated for termination to all other dealers of the same line make in the entire state, which may not be an accurate measure of a dealer’s performance. With the statutory changes, manufacturers must now consider factors like brand preference in a dealer’s market, the proximity of other dealers selling the same line make, local demographics, distance and drive time to the dealer’s facility, the proximity of a competing brand’s manufacturing facility