Termination or discontinuation of franchise: Compensation of dealer.
1. Upon the termination or refusal to continue a franchise, the manufacturer or distributor shall compensate the dealer for:
(a) The dealer’s inventory of new vehicles, including new vehicles not of the current model year if delivered to the dealer during the 18-month period immediately preceding the effective date of the termination or refusal to continue the franchise. As used in this paragraph, a “new vehicle” is one which has not been damaged, materially altered or registered with the Department or with the appropriate agency of authority of any other state, the District of Columbia, any territory or possession of the United States or any foreign state, province or country.
(b) The dealer’s inventory of parts and accessories which:
(1) Have been purchased by the dealer from the manufacturer or distributor; and
(2) Are listed in a current parts catalog of the manufacturer or distributor.
(c) Any special tools purchased by the dealer from the manufacturer or distributor, less a reasonable allowance for depreciation.
(d) Any equipment, furnishings or signs purchased by the dealer from the manufacturer or distributor, less a reasonable allowance for depreciation.
(e) Except as otherwise provided in subsection 4, the fair rental value for 90 days, and any additional period allowed by the Director after considering the difficulty of finding a new tenant for the dealer’s premises affected, after the effective date of the termination or refusal to continue of the portion of the dealer’s place of business that was used by the dealer to sell or service vehicles or other products of the manufacturer or distributor.
2. Compensation paid pursuant to paragraphs (a) to (d), inclusive, of subsection 1 must be paid in an amount at least equal to the greater of:
(a) The amount actually paid by the dealer for the vehicles, parts, tools and equipment; or
(b) The amount currently paid by other dealers in this State for the vehicles, parts, tools and equipment.
3. If compensation is paid pursuant to paragraph (e) of subsection 1, the dealer shall allow the manufacturer or distributor paying the compensation the use and possession of the premises affected.
4. The manufacturer or distributor is not required to pay compensation pursuant to paragraph (e) of subsection 1 if the dealer has been convicted of a crime involving fraud in connection with his application for or operation of the franchise.
5. This section does not relieve a dealer of his obligation to mitigate damages resulting from the termination or refusal to continue the franchise.
Last modified: February 25, 2006