Transaction conditioned upon continuation of franchise
Sec. 22. (a) A dealer may not transfer, sell, or assign the business
and assets of a dealership or an interest in the dealership to another
person that contemplates or is conditioned upon a continuation of the
franchise relationship with the manufacturer or distributor unless the
dealer first:
(1) notifies the manufacturer or distributor of the dealer's
decision to make the transfer, assignment, or sale by written
notice; and
(2) obtains the approval of the manufacturer or distributor.
The dealer must provide the manufacturer or distributor with
completed application forms and related information generally used
by the manufacturer or distributor to conduct its review of such a
proposal, and a copy of all agreements regarding the proposed
transfer, assignment, or sale.
(b) The manufacturer or distributor shall send a letter by certified
mail to the dealer within sixty (60) days of receipt of the information
specified in subsection (a). The letter must indicate any disapproval
of the transfer, assignment, or sale and must set forth the material
reasons for the disapproval. If the manufacturer or distributor does
not respond by letter within the sixty (60) day period, the
manufacturer's or distributor's consent to the proposed transfer,
assignment, or sale is considered to have been granted. A
manufacturer or distributor may not unreasonably withhold approval
of a transfer, assignment, or sale.
(c) A manufacturer or distributor has a right of first refusal as
specified in the franchise agreement to acquire the new vehicle
dealer's assets or ownership if there is a proposed change of more
than fifty percent (50%) of the dealer's ownership or the transfer of
more than fifty percent (50%) of the new vehicle dealer's assets if all
of the following are met:
(1) The manufacturer or distributor notifies the dealer in writing
of its intent to exercise its right of first refusal within the sixty
(60) day notice limit provided in subsection (b).
(2) The exercise of the right of first refusal will result in the
dealer and the dealer's owners receiving consideration, terms,
and conditions that are either the same as or better than those
they have contracted to receive under the proposed change of
more than fifty percent (50%) of the dealer's ownership or the
transfer of more than fifty percent (50%) of the new vehicle
dealer's assets.
(3) The proposed change of the dealership's ownership or the
transfer of the new vehicle dealer's assets does not involve the
transfer of assets or the transfer or issuance of stock by the
dealer or one (1) or more of the dealer's owners to any of the
following:
(A) A designated family member or members including any
of the following members of one (1) or more dealer owners:
(i) The spouse.
(ii) A child.
(iii) A grandchild.
(iv) The spouse of a child or a grandchild.
(v) A sibling.
(vi) A parent.
(B) A manager:
(i) employed by the dealer in the dealership during the
previous four (4) years; and
(ii) who is otherwise qualified as a dealer operator.
(C) A partnership or corporation controlled by any of the
family members described in clause (A).
(D) A trust arrangement established or to be established:
(i) for the purpose of allowing the new vehicle dealer to
continue to qualify as such under the manufacturer's or
distributor's standards; or
(ii) to provide for the succession of the franchise
agreement to designated family members or qualified
management in the event of the death or incapacity of the
dealer or its principal owner or owners.
(4) Except as otherwise provided in this subsection, the
manufacturer or distributor agrees to pay the reasonable
expenses, including reasonable attorney's fees, that do not
exceed the usual, customary, and reasonable fees charged for
similar work done for other clients, and that are incurred by the
proposed owner or transferee before the manufacturer's or
distributor's exercise of its right of first refusal in negotiating
and implementing the contract for the proposed change of the
dealer ownership or the transfer of the new vehicle dealer's
assets. Payment of expenses and attorney's fees is not required
if the dealer has failed to submit an accounting of those
expenses within twenty (20) days of the dealer's receipt of the
manufacturer's or distributor's written request for such an
accounting. An expense accounting may be requested by a
manufacturer or distributor before exercising its right of first
refusal.
(d) Violation of this section by the manufacturer or distributor is
an unfair practice by a manufacturer or distributor.
As added by P.L.152-1999, SEC.1.
Last modified: May 27, 2006