Payment of dealer for labor costs; uniform warranty
reimbursement policies
Sec. 14. (a) This section does not authorize a manufacturer or
distributor and its franchisees in Indiana to establish a uniform
hourly labor reimbursement rate effective for the entire state.
(b) It is an unfair practice for a manufacturer or distributor to fail
to compensate to a dealer the posted hourly labor rate for the work
and services the dealer is required to perform in connection with the
dealer's delivery and preparation obligations under any franchise or
fail to compensate to a dealer the posted hourly labor rate for labor
and other expenses incurred by the dealer under the manufacturer's
warranty agreements as long as the posted rate is reasonable.
Judgment of the reasonableness includes consideration of charges for
similar repairs by comparable repair facilities in the local area as
well as mechanic's wages and fringe benefits.
(c) A manufacturer or distributor and at least thirty percent (30%)
of its franchisees in Indiana of the same line make may agree in an
express written contract citing this section to a uniform warranty
reimbursement policy to be used by franchisees for the performance
of warranty repairs. The contract must include the reimbursement for
parts used in warranty repairs or the use of a uniform time standards
manual, or both. The allowance for diagnosis within the uniform
time standards manual must be reasonable and adequate for the work
and service to be performed. The manufacturer or distributor shall
have:
(1) only one (1) agreement with each line make; and
(2) a reasonable and fair procedure for franchisees to request a
modification or adjustment of a standard included in the
uniform time standards manual.
(d) A contract described in subsection (c) must meet the following
criteria:
(1) Establish a uniform parts reimbursement rate that must be
greater than the manufacturer's or distributor's nationally
established parts reimbursement rate in effect at the time the
contract becomes effective. A subsequent contract must include
a uniform reimbursement rate that is equal to or greater than the
rate in the immediately prior contract.
(2) Apply to all warranty repair orders written while the
agreement is in effect.
(3) At any time during the period the contract is in effect:
(A) be available to any franchisee of the same line make as
the franchisees who entered into the contract with the
manufacturer or distributor; and
(B) be available to the franchisee of the same line make on
the same terms as apply to the franchisees who entered into
the contract with the manufacturer or distributor.
(4) Be for a term not to exceed three (3) years.
(5) Allow any party to the uniform warranty reimbursement
policy to terminate the policy with thirty (30) days prior written
notice to all parties upon the annual anniversary of the policy,
if the policy is for at least one (1) year.
(6) Remain in effect for the entire life of the original period if
the manufacturer and at least one (1) franchisee remain parties
to the policy.
(e) A manufacturer or distributor that enters into a contract with
its franchisees under subsection (c) may only seek to recover its costs
from a franchisee that receives a higher reimbursement rate, if
authorized by law, subject to the following:
(1) Costs may be recovered only by increasing invoice prices on
new vehicles received by the franchisee.
(2) A manufacturer or distributor may make an exception for
vehicles that are titled in the name of a purchaser in another
state. However, price increases imposed for the purpose of
recovering costs imposed by this section may vary from time to
time and from model to model and must apply uniformly to all
franchisees of the same line make that have requested
reimbursement for warranty repairs at a level higher than
provided for in the agreement.
(f) A manufacturer or distributor that enters into a contract with
its franchisees under subsection (c) shall do the following:
(1) Certify to the bureau under oath, in a writing signed by a
representative of the manufacturer or distributor, that at the time
the contract was entered into at least thirty percent (30%) of the
franchisees of the line make were parties to the contract.
(2) File a copy of the contract with the bureau at the time of the
certification.
(3) Maintain a file that contains the information upon which the
certification required under subdivision (1) is based for three
(3) years after the certification is made.
As added by P.L.2-1991, SEC.11. Amended by P.L.78-2002, SEC.6.
Last modified: May 27, 2006