Introduced Version






SENATE BILL No. 497

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DIGEST OF INTRODUCED BILL



Citations Affected: IC 23-2-2.7.

Synopsis: Vehicle franchise practices. Requires an automobile manufacturer or distributor, as part of a franchise relationship, to make the following payments to an automobile dealer: (1) Not more than 60 days after the termination, cancellation, or nonrenewal of the franchise agreement, or the discontinuance of the line make, the value of certain items that are in the dealer's inventory or possession and whose titles are transferred to the manufacturer or distributor. (2) Upon the termination, cancellation, or nonrenewal of the franchise agreement, or the discontinuance of the line make, the rental value of the dealership facilities. Provides that a failure to make the payments is a deceptive franchise practice.

Effective: July 1, 2009.





Head




    January 15, 2009, read first time and referred to Committee on Corrections, Criminal, and Civil Matters.







Introduced

First Regular Session 116th General Assembly (2009)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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SENATE BILL No. 497



    A BILL FOR AN ACT to amend the Indiana Code concerning business and other associations.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 23-2-2.7-8; (09)IN0497.1.1. -->     SECTION 1. IC 23-2-2.7-8 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 8. (a) As used in this section, "fair market value" means the fair market value on the date of the termination, cancellation, nonrenewal, or discontinuance.
    (b) As used in this section, "termination, cancellation, nonrenewal, or discontinuance" refers to the:
        (1) termination;
        (2) cancellation; or
        (3) nonrenewal;
of a franchise to which a manufacturer or distributor and a dealer are parties, or the discontinuance of a line make.
    (c) Not more than sixty (60) days after the receipt of a request for payment after termination, cancellation, nonrenewal, or discontinuance, the manufacturer or distributor shall pay to the dealer the amounts described in subsection (d) for items:
        (1) that are in the dealer's inventory or possession at the time

of termination, cancellation, nonrenewal, or discontinuance; and
        (2) to which the dealer conveys title to the manufacturer or distributor.
    (d) A manufacturer or distributor shall pay the following amounts to a dealer:
        (1) The acquisition cost of current model year motor vehicles and immediately preceding model year motor vehicles with less than three hundred (300) odometer miles that are acquired from the manufacturer or distributor.
        (2) For all new, unused, and undamaged parts, in their original packages, the result of:
            (A) one hundred five percent (105%) of dealer cost; minus
            (B) allowances authorized by the manufacturer or dealer.
        For distributors of this subdivision, dealer cost is the cost listed in the parts catalog in effect at the time of termination, cancellation, nonrenewal, or discontinuance.
        (3) The fair market value of supplies and furnishings purchased by the dealer from:
            (A) the manufacturer;
            (B) the distributor; or
            (C) a source approved by the manufacturer or distributor.
        (4) The fair market value of special tools, equipment, or required computer or special service equipment and software offered for sale by the dealer at any time during the three (3) years immediately preceding the termination, cancellation, nonrenewal, or discontinuance.
        (5) The fair market value of signs bearing a trademark or trade name whose purchase was recommended or required by the manufacturer or distributor.
    (e) Title shall be deemed to have passed to the manufacturer or distributor on the date of termination, cancellation, nonrenewal, or discontinuance, and the dealer shall have a perfectable security interest in the assets that have been transferred.
    (f) The failure to make payment as required under subsection (d) is a deceptive franchise practice.

SOURCE: IC 23-2-2.7-9; (09)IN0497.1.2. -->     SECTION 2. IC 23-2-2.7-9 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 9. (a) As used in this section, "termination, cancellation, nonrenewal, or discontinuance" has the meaning set forth in section 8(b) of this chapter.
    (b) This section applies in the event of a termination,

cancellation, nonrenewal, or discontinuance, other than a termination, cancellation, nonrenewal, or discontinuance due to a dealer's:
        (1) filing for bankruptcy or receivership;
        (2) license revocation under IC 9-23-2 or IC 9-23-6;
        (3) criminal conviction; or
        (4) commission of fraud.
    (c) Upon a termination, cancellation, nonrenewal,
or discontinuance, the manufacturer shall pay the dealer:
        (1) if the dealer is leasing the dealership facilities from an individual or entity other than the manufacturer, the lesser of:
            (A) an amount equal to the rent for the unexpired lease term; or
            (B) two (2) years' rent under the terms of the lease; or
        (2) if the dealer owns the dealership facilities, an amount equal to the reasonable rental value of the dealership facilities for two (2) years.
For purposes of subdivision (2), the two (2) year period includes the calendar year in which the termination, cancellation, nonrenewal, or discontinuance occurs and the immediately preceding calendar year.
    (d) A dealer that leases the dealership facilities shall attempt to mitigate damages under the terms of the lease.
    (e) A manufacturer may discharge its obligations under a lease by negotiating a lease termination payment, sublease, or new lease.

     (f) The failure to make payment as required under subsection (c) is a deceptive franchise practice.