(a) This section shall only apply to a dealer contract between a dealer who is not a single-line dealer and a supplier who is not a single-line supplier.
(b) If a supplier has contractual authority to approve or deny a request for a sale or transfer of a dealer’s business or an equity ownership interest in the business, the supplier shall approve or deny the request within 60 days after receiving a written request from the dealer. If the supplier has neither approved nor denied the request within the 60-day period, the request shall be deemed approved. The dealer’s request shall include reasonable financial information, personal background, character references, and work history information for the acquiring persons. If a supplier denies a request made pursuant to this section, the supplier shall provide the dealer with a written notice of that denial that states the reasons for the denial. A supplier may only deny a request based on the failure of the proposed transferees to meet the reasonable requirements consistently imposed by the supplier in determining approval of transfers or approvals of new dealers.
(c) If a dealer dies and the supplier has contractual authority to approve or deny a request for the sale or transfer of the dealer’s business or an equity ownership interest in the business, the dealer’s estate or other person with authority to transfer the dealer’s assets shall have 180 days to submit to the supplier a written request for a sale or transfer of that business or equity ownership interest. If the request is timely submitted, the supplier shall approve or deny that request in accordance with subdivision (b). Notwithstanding any contrary provision of this chapter, any attempt by a supplier to terminate the dealer contract as a result of the death of a dealer shall be delayed until there has been compliance with the terms of this section or the 180-day period has expired, as applicable.
(d) Notwithstanding subdivision (c), if a supplier and dealer executed an agreement concerning succession rights prior to the dealer’s death, and if the agreement is still in effect, the agreement shall be observed even if it designated someone other than the surviving spouse or heirs of the decedent as the successor.
(e) A supplier may withhold consent to a transfer of an interest in a dealership if, with due regard to regional market conditions and distribution economies, the dealer’s area of responsibility or trade area does not afford sufficient sales potential to reasonably support a dealer. In any dispute between a supplier and dealer under this subdivision, the supplier shall bear the burden of proving that the dealer’s area of responsibility or trade area does not afford sufficient sales potential to reasonably support a dealer.
(Added by Stats. 2005, Ch. 712, Sec. 7. Effective October 7, 2005.)
Last modified: October 25, 2018