1. OUR NEW FRANCHISE LAW (2015)
West Virginia Automobile & Truck Dealers Association Convention
June 23, 2015
OUR NEW
FRANCHISE LAW (2015)
PRESENTED BY:
Johnnie E. Brown, Esquire
JamesMark Building
901 Quarrier Street
Charleston, WV 25301
(304)
(304)

2. WARRANTY RETAIL LABOR AND PARTS (W. Va. Code 17A-6A-8a)
I. Retail Parts Rate:
Submit 100 sequential non-warranty customer paid service orders, or
90 consecutive days of non-warranty repair orders (can not be older than 180 days) 2

3. WARRANTY RETAIL LABOR AND PARTS (W. Va. Code 17A-6A-8a)
II. Retail Labor Rate:
Use same process as non-warranty parts.
Average labor rate determined by dividing total labor sales by total hours.
Diagnostic time is required to be included in manufacturer’s time allowance or is a separate compensable item.
Dealer can request additional diagnostic or repair time. 3

4. WARRANTY RETAIL LABOR AND PARTS (W. Va. Code 17A-6A-8a)
III. Exclusions from Labor and Parts Rate:
Parts sold at wholesale;
Routine maintenance items;
Tires;
Vehicle reconditioning; and
Repairs made at special events or promotional discounts. 4

5. WARRANTY RETAIL LABOR AND PARTS (W. Va. Code 17A-6A-8a)
IV. Misc. Provisions of Warranty Labor and Parts Rate:
Presumed to be reasonable, goes into effect 30 days following manufacturer approval.
Manufacturer can rebut presumption of reasonableness, but within 30 days of submission.
Cannot require dealer to engage in unduly burdensome documentation of parts and labor.
Rate is good for one year. 5

6. FACILITY UPGRADES/USE OF VENDORS: W. Va. Code 17A-6A-10(i)
Prohibited practice to coerce or require dealer to make upgrades within 10 years of that which was previously required and approved by manufacturer.
Grandfathered in for approval for any vehicle sales incentives or other payments to customer or dealer if facility was compliant within the last 10 years and facility was an element of new sales incentive or payment program. 6

7. FACILITY UPGRADES/USE OF VENDORS: W. Va. Code 17A-6A-10(i)
Made a prohibited practice to require dealer to purchase goods or services only from manufacturer’s vendor.
W. Va. Code 17A-6A-10(2)(y)
Dealer provided option to obtain similar quality goods from other vendors. Dealer’s option is not available if manufacturer pays dealer difference in price of goods or services.
This exception not available on manufacturer intellectual property, trademark rights, or trade dress usage guidelines. 7

8. TERMINATIONS (W. Va. Code 17A-6A-8 and 17A-6A-4)
Definition of good cause changed to include, “whether the manufacturer made available the appropriate volumes and type of motor vehicles to the dealer, and a reasonable opportunity for sales and service training to the dealer.”
W. Va. Code 17A-6A-4(2)(h) 8

9. TERMINATIONS (W. Va. Code 17A-6A-8 and 17A-6A-4)
Increased compensation for dealer upon termination:
Increased mileage on motor vehicles eligible for re-purchase from 750 miles to 1000.
Supplies and parts at the published list price and within current parts catalog.
Equipment, special tools, furnishings and signs. (Five year depreciation schedule) 9

10. TERMINATIONS (W. Va. Code 17A-6A-8 and 17A-6A-4)
When a model line is terminated increased compensation allowed:
Any actual damages.
Any cost incurred by for facility upgrades with previous five years.
Payment required within 45 days. Manufacturer has 30 days to note objection. 10

11. CAPTIVE FINANCE COMPANIES: W. Va. Code 17A-6A-10(1)(k)
Captive finance source defined as any financial source that provides automotive loans, which is, directly or indirectly, owned, operated, or controlled by a manufacturer or distributor.
Unlawful for captive finance source to require dealer to sell its retail installment contracts or other products to obtain incentive programs payments.
Unlawful for captive finance source to engage in any conduct which would be prohibited by manufacturer or distributor against dealer. 11

12. CHANGES IN AREA OF SALES RESPONSIBILITY: W. Va. Code 17A-6A-10(2)(s)
60 days required notice of any change.
Dealer has right to request explanation, including various information relied upon by the manufacturer.
Dealer given rights to challenge in any internal manufacturer appeal process and also may petition court. Alteration to area of responsibility prohibited until court process resolved.
If area of responsibility altered, manufacturer shall allow 24 months for dealer to become sales effective in new area. 12

13. OPEN ACCOUNT PROTECTION: W. Va. Code 17A-6A-14a
If a written dispute is filed by the dealer for a specific charge, the manufacturer may not collect any chargebacks from the dealer’s account. An appeal process is established, including court challenges. Monies may not be removed from the open account until the appeal process is completed. 13

14. DEALER DATA PROTECTION: W. Va. Code 17A-6A-15a
Dealer only required to provide customer information to the extent lawfully permissible.
Manufacturer or vendor must cooperate with dealer if dealer wishes to monitor the specific date accessed.
Manufacturer or vendor may not provide access to dealership’s information without first obtaining dealer’s express written consent.
Dealer may, upon written request, obtain a list of specific third parties which the manufacturer or vendor has provided dealer data to within prior 12 months. 14

15. DEALER DATA PROTECTION: W. Va. Code 17A-6A-15a
Manufacturer, vendor, or dealer management system vendor, must provide dealer timely notice of any security breach of dealership or customer data.
Manufacturer, vendor or third party shall fully indemnify dealer for willful negligent, or illegal use or disclosure of dealer or customer data.
Importantly, this section only applies to contracts entered into after the effective date of this law (June 14, 2015). 15

16. EXPORTS: W. Va. Code 17A-6A-15b
A rebuttable presumption is created if dealer causes the vehicle to be registered in a state and has determined that customer is not on a list of known or suspected exporters provided by the manufacturer at the time of sale.
If the above steps are followed, it is unlawful for a manufacturer to take adverse action against dealer if the vehicle is exported to a foreign country or resold in violation of the manufacturers sale for resale policy. 16

17. MANUFACTURERS PERFORMANCE STANDARDS: W. Va. Code 17A-6A-15c
Brand new section.
A manufacturer may not require a dealer to follow performance standards which are not applied uniformly to “other similarly situated dealers.”
Dealer given right to make written request for explanation of methodology, criteria, and calculations used to establish performance standards.
Manufacturer has responsibility to locate a reasonable and appropriate supply of vehicles to assist dealer in achieving performance standards
Manufacturer bears burden of proof to establish that its performance standards meets the requirements of this section. 17

18. SUCCESSION: W. Va. Code 17A-6A-11
Increased time frame for any designated family member to satisfy manufacturer’s written and reasonable standards in financial qualifications for appointment as dealer and principal to a minimum of one year.
Manufacturer has burden of proof to show good cause why succession should not be allowed.
Person seeking succession has 180 days to file civil action.
If civil action filed, manufacturer may not make changes in dealer agreement pending exhaustion of all appeals. 18

19. FINANCE AND INSURANCE PRODUCTS: W. Va. Code 17A-6A-10(2)(x)(i) to (v)
“Prohibited practice” for manufacturer to require or coerce dealer to sell or offer to sell exclusively various finance and insurance products.
Manufacturer may not measure dealer’s performance under franchise agreement based upon sale of certain finance and insurance products.
This section does not prohibit a dealer from entering into voluntary incentive program for the exclusive sale of various finance and insurance products. 19