Pub. 8 2018 Issue 3

8 AUTOMOBILE DEALER NEWS ILLINOIS www.illinoisdealers.com COUNSELOR’SCORNER BY JULIE CARDOSI, LAW OFFICE OF JULIE A. CARDOSI, P.C. T he Illinois legislature adopted changes last year to the Illinois Motor Vehicle Franchise Act (“MVFA”) which place additional limitations on the manufacturers’ ability to impose requirements on dealer- ship facilities. Leading up to these chang- es, costs to dealers from constructing new facilities or remodeling existing facilities to comply with manufacturers’ image programs were skyrocketing. This was due, in part, to the frequency of program upgrade changes, that were required, and the requirements that improvements use manufacturer-specified materials. In 2017, the MVFA was amended af- ter having been unanimously approved by both the House and Senate Chambers of the Illinois legislature, to prohibit the manufacturers (their divisions and their representatives) from requiring deal- ers to remodel their dealership facilities within ten (10) years of the most recently required remodel. Section 4(d)(11) of the MVFA states: “It shall be deemed a violation for a manufacturer, a distributor, a wholesaler, a distributor branch or division, or officer, agent or other representative thereof: to coerce or require any dealer to construct improvements to his or her facilities or to install new signs or other franchiser image elements that replace or substantially alter those improvements, signs or franchiser image elements completed within the past 10 years that were required and approved by the manufacturer or one of its affili- ates.” (815 ILCS 710/4(d)(11)). Under this amended law, the 10-year period starts to run for a dealer (which includes that dealer’s successors and assigns) either, on the date the manu- facturer gives final written approval of the facility improvements or instal- lation of signs or other franchiser ele- ments, or on the date the dealer receives a certificate of occupancy, whichever is later. Routine maintenance, such as but not limited to, interior painting or similar maintenance that is reasonably required to keep the dealership facility in attractive condition is not considered to be a substantial alteration. The 2017 MVFA amendment also prohibits manufacturers from requiring dealers to purchase dealership building improvement materials and services from a manufacturer-designated vendor, provided the dealer selects a vendor, approved by the manufacturer, unless, however, the manufacturer provides substantial reimbursement to the dealer for the manufacturer-designated vendor materials or services. A manufacturer may require a specific vendor if the manufacturer reimburses the dealer for the increased cost of the materials and services. Further, the amendment requires a manufacturer that leases signage and other image and design elements to dealers to give the dealer the option to purchase the signs or other franchiser image or design elements from a vendor selected by t he dea ler and approved by t he manufacturer. The manufacturer cannot unreasonably withhold its approval, where such approval is required. The dealer is, however, required to conform to t he manu fac t u re r’s i ntel lec t ua l property or trademark usage guidelines. (815 ILCS 710/4(d)(12)). Elsewhere in the MVFA, the manu- facturer is prohibited from requiring a dealer to underutilize the dealership fa- cility by requiring removal or exclusion from the dealership, of vehicle lines for which the dealer has franchise agree- ments with other manufacturers, pro- vided the dealer satisfies certain speci- fied statutory requirements (e.g., keeps reasonable line of credit for each vehicle line, etc.). (815 ILCS 710/4(d)(8)). Dealership Facilities: Limitations Under Illinois Law on Manufacturers’ Requirements