§ 63-17-118. Compensation to dealer upon termination, cancellation, refusal to continue, or
refusal to renew any franchise or any discontinuation of any line or make
(1) Upon any
termination, cancellation, refusal to continue, or refusal to renew any franchise
or any discontinuation of any line or make of motor vehicle or parts essential
to such line or make, the manufacturer or distributor shall pay reasonable
compensation to the motor vehicle dealer as follows:
(a) (i) The motor vehicle dealer's net cost for any new, unused,
undamaged, unregistered, unmodified and unsold vehicle with a gross vehicle
weight rating of sixteen thousand (16,000) pounds or less of the current and
prior model year with less than seven hundred fifty (750) miles on the odometer
that is in the motor vehicle dealer's inventory and was purchased from the
manufacturer or another motor vehicle dealer of the same line or make in the
ordinary course of business.
(ii) The motor vehicle dealer's net cost for any new, unused, undamaged,
unregistered, unmodified and unsold vehicle with a gross vehicle weight rate of
more than sixteen thousand (16,000) pounds of the current and prior model year
that is in the motor vehicle dealer's inventory and was purchased from the
manufacturer or another motor vehicle dealer of the same line or make in the
ordinary course of business.
(iii) The manufacturer or distributor shall have no obligation to
repurchase a motor vehicle if the motor vehicle has been modified to the extent
that the modifications are so significant as to void the manufacturer's
warranty or has been substantially altered to the prejudice of the manufacturer
or distributor. The manufacturer or distributor shall have no obligation
to repurchase any parts used to modify the motor vehicle that were not produced
by or for the manufacturer or distributor.
(b) The motor vehicle dealer's net cost of each new, unused and undamaged
part or accessory listed in the manufacturer or distributor's current parts
catalog and in the original, resalable merchandising packages. In the
case of sheet metal, a comparable substitute for the original package shall be
sufficient. New or reconditioned core parts shall be valued at their core
value, listed in the original vehicle manufacturer's or distributor's current
parts catalog. If the part or accessory was purchased by the motor
vehicle dealer from another authorized same line or make motor vehicle dealer
in the ordinary course of business, the manufacturer shall purchase the part or
accessory for the price in the current parts catalog. The motor vehicle
dealer shall maintain accurate records regarding the actual purchase price of
parts that the manufacturer or distributor is required to purchase under this
paragraph.
(c) In addition to the costs referenced in paragraphs (a) and (b) of this
subsection, the manufacturer shall pay the motor vehicle dealer an additional
five percent (5%) charge based on the total compensation due under this section
for handling, packing, storing and loading of any parts subject to
repurchase pursuant to this section and the manufacturer shall pay for shipping
the vehicles subject to repurchase from the location of the motor vehicle
dealer to the location directed by the manufacturer.
(d) The manufacturer shall pay the motor vehicle dealer the amounts
specified in this subsection within ninety (90) days after the tender of the
property, subject to the motor vehicle dealer providing evidence of good and clear
title upon return of property to the manufacturer. The manufacturer shall
remove the property from the motor vehicle dealer's premises within one hundred
eighty (180) days after the tender of the property.
(2) In the event a
manufacturer or distributor cancels, refuses to continue, or refuses to renew
any franchise or discontinues any line or make or parts essential to such line
or make, in addition to the compensation provided in subsection (1) of this
section, the manufacturer or distributor shall pay reasonable compensation to
the motor vehicle dealer as follows:
(a) In the event a motor vehicle dealer leases the dealership facilities,
then the manufacturer shall be liable for twelve (12) months payment of the
gross rent or the remainder of the term of the lease, whichever is less.
If the dealership facilities are not leased, then the manufacturer shall be
liable for the equivalent of twelve (12) months payment of gross rent based
upon the fair market value of the dealership facilities. The gross rent
shall be paid only to the extent that the dealership premises are recognized in
the franchise and only if they are used solely for performance in accordance
with the franchise and not substantially in excess of those facilities recommended
by the manufacturer or distributor. If the facility is used for the
operations of more than one (1) franchise, the gross rent compensation shall
only include the prorated value of the square footage used exclusively for the
terminated franchise or line or make at the time of termination. This
paragraph shall not apply to a termination, cancellation or nonrenewal due to a
sale of the assets or stock of the motor vehicle dealership. In addition
to the gross rent, the manufacturer is required to pay the dealer the net cost
of any upgrades or other alterations made by the motor vehicle dealer to the
dealership facilities which were required in writing by the manufacturer and
made by the motor vehicle dealer within two (2) years prior to the effective date
of termination. Nothing in this paragraph shall be construed to relieve a
motor vehicle dealer of its obligation to mitigate damages upon
termination, cancellation, or nonrenewal. As used in this paragraph
"Gross rent" is the monthly rent plus the monthly cost of insurance
and taxes.
(b) The manufacturer shall pay the motor vehicle dealer for the value of
twelve (12) months of any outstanding amounts on any leases or the remaining
amount of the lease, whichever is less, of computer hardware or software that
is exclusively used to manage and report data of the terminated line or make to
the manufacturer or distributor for financial reporting requirements.
(c) The manufacturer shall pay the motor vehicle dealer for the value of
twelve (12) months or the remaining amount of the lease, whichever is less of
any outstanding amounts on any manufacturer or distributor required equipment
leases, service contracts, and sign leases.
(d) The fair market value of each undamaged sign owned by the motor
vehicle dealer which bears a trademark or trade name used or claimed by the
manufacturer if the sign was purchased from, or purchased at a requirement of,
the manufacturer, plus the costs of installing the sign and the costs of
purchasing and installing any pole upon which the sign is located. During
the first three (3) years after its purchase, the fair market value of each
sign shall be the motor vehicle dealer's net costs of purchasing the
sign. Thereafter, the fair market value of the sign shall be the greater
of its actual market value or its depreciated value on the books of the motor
vehicle dealer.
(e) The fair market value of all tools, data processing programs and
equipment and automotive service equipment owned by the motor vehicle dealer
which are exclusively used for the line or make being terminated and which were
required in writing and designated as equipment, tools, data processing
programs and equipment, and automotive service equipment and purchased from, or
purchased as a requirement of, the manufacturer if the equipment, tools,
programs and equipment are in usable and good condition, except for reasonable
wear and tear. During the first three (3) years after their purchase, the
fair market value of each item of equipment, tools, programs, and equipment
shall be the motor vehicle dealer's net cost associated with purchasing the
items. Thereafter, the fair market value of each item shall be the greater of
its actual market value or its depreciated value on the books of the motor
vehicle dealer.
(f) In addition to the other payments set forth in this section, if a
termination, cancellation, or nonrenewal is premised upon the manufacturer
discontinuing the sale in this state of a line or make that was the subject of
the franchise, then the manufacturer shall also be liable to the motor vehicle
dealer for an amount at least equivalent to the fair market value of the motor
vehicle dealer's franchise for the discontinued line or make as of:
(i) The date immediately preceding the date the manufacturer announces
the action which results in termination, cancellation, or nonrenewal; or
(ii) The day twelve (12) months prior to the date on which
the notice of termination, cancellation, or nonrenewal is issued, whichever
amount is higher.
At the motor vehicle dealer's
option, the manufacturer may avoid paying fair market value of the motor
vehicle franchise to the motor vehicle dealer under this paragraph if the
manufacturer, or another motor vehicle manufacturer pursuant to an agreement
with the manufacturer, offers the motor vehicle dealer a replacement motor
vehicle franchise with terms substantially similar to that offered to other
same line or make motor vehicle dealers.
(g) The manufacturer shall pay the motor vehicle dealer the amounts
specified in this subsection along with any other amounts that may be due to
the motor vehicle dealer under the franchise agreement within ninety (90) days
after the tender of the property, subject to the motor vehicle dealer providing
evidence of good and clear title upon return of the property to the
manufacturer. The manufacturer shall remove the property within one
hundred eighty (180) days after the tender of the property from the motor
vehicle dealer's premises. Unless previous arrangements have been made
and agreed upon, the motor vehicle dealer is under no obligation to provide
insurance for the property left after one hundred eighty (180) days.
(3) This section shall not apply
to any sale, exchange, inheritance, gift or other transfer of ownership, stock,
assets, management, or any other rights of the motor vehicle dealer, or to any
termination for good cause, including, but not limited to, a conviction for a
felony involving moral turpitude, for failure to conduct business for seven (7)
consecutive business days or eight (8) business days out of any fifteen-day
business period, for insolvency of the motor vehicle dealer or for loss of
license to sell motor vehicles, or where there is a failure by the new motor
vehicle dealer to comply with a provision of the franchise which provision is
both reasonable and of a material significance to the franchise relationship
provided that the dealer has been notified in writing of the failure.
(4) This section shall not
apply to motor homes.