|SAME AS||SAME AS S06797-A|
|COSPNSR||Heastie, Jaffee, McDonald, Abinanti, Tedisco, Weisenberg, Fahy, Cusick, Pretlow, Schimel, Crespo, McDonough, Weprin, Hawley, Santabarbara, Walter, Gunther, Magnarelli|
|MLTSPNSR||Crouch, DenDekker, Mayer, Nolan, Palmesano, Perry, Steck, Thiele|
|Amd SS415, 463 & 465, V & T L|
|Relates to automobile manufacturers and unfair practices by franchisors.|
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STATE OF NEW YORK ________________________________________________________________________ 7844--B Cal. No. 503 2013-2014 Regular Sessions IN ASSEMBLY June 6, 2013 ___________ Introduced by M. of A. GANTT, HEASTIE, JAFFEE, McDONALD, ABINANTI, TEDISCO, WEISENBERG, FAHY, CUSICK, PRETLOW, SCHIMEL, CRESPO, McDO- NOUGH, WEPRIN, HAWLEY, SANTABARBARA, WALTER -- Multi-Sponsored by -- M. of A. CROUCH, DenDEKKER, MAYER, NOLAN, PERRY, STECK, THIELE -- read once and referred to the Committee on Transportation -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- recommitted to the Committee on Transportation in accordance with Assembly Rule 3, sec. 2 -- reported from committee, advanced to a third reading, amended and ordered reprinted, retaining its place on the order of third reading AN ACT to amend the vehicle and traffic law, in relation to automobile manufacturers and unfair practices by franchisors The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivision 5 of section 415 of the vehicle and traffic law 2 is amended by adding a new paragraph b-2 to read as follows: 3 b-2. A statement indicating any interest in the applicant's franchise 4 entity by a person or entity described in paragraph f of subdivision 5 seven of this section. 6 § 2. Paragraph f of subdivision 7 of section 415 of the vehicle and 7 traffic law, as added by chapter 490 of the laws of 2008, is amended to 8 read as follows: 9 f. Except as provided in paragraph (bb) of subdivision two of section 10 four hundred sixty-three of this title and subparagraph (iii) of this 11 paragraph: 12 (i) The commissioner shall not issue any certificate of registration 13 authorized by this section to any franchisor, manufacturer, distributor, 14 distributor branch or factory branch, as such [ term is] terms are 15 defined in section four hundred sixty-two of this title, or to any 16 subsidiary, affiliate or controlled entity thereof, except that the 17 commissioner may renew such certificate previously issued or otherwise EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11010-07-4A. 7844--B 2 1 approved to operate to a franchisor prior to [ May second, two thousand2 two] July first, two thousand six. Nothing in this section shall 3 preclude the establishment of such facilities necessary to continue the 4 ongoing operation of any holder of a certificate of registration author- 5 ized by this section or otherwise approved to operate to a franchisor 6 provided such original certificate or approval was granted prior to July 7 first, two thousand six. 8 (ii) On or after the effective date of this subparagraph, the commis- 9 sioner shall not issue any certificate of registration, or renew any 10 certificate, unless the original certificate was issued before July 11 first, two thousand six, to any motor vehicle dealer in which a franchi- 12 sor, manufacturer, distributor, distributor branch or factory branch, as 13 such terms are defined in section four hundred sixty-two of this title, 14 or any subsidiary, affiliate or controlled entity thereof, has acquired, 15 or possesses, a controlling interest in the franchise entity except: 16 (1) when operating such franchise for a temporary period, not to 17 exceed one year, during the transition from one owner of the motor vehi- 18 cle dealership to another, provided, however, that such temporary period 19 may be extended once for an additional period not to exceed one year for 20 good cause. Provided that for franchisors of house coaches, the period 21 of temporary ownership of a franchised house coach dealership may be 22 extended in one year increments for good cause shown, except that the 23 aggregate of such extensions shall not exceed five years; or 24 (2) when operating such franchise temporarily under a plan with an 25 independent individual who is obligated to make a significant investment 26 in the dealership that is subject to loss and has an ownership interest 27 or expects to acquire full ownership in a reasonable period under 28 reasonable terms and conditions, provided that a reasonable period shall 29 be presumed to not exceed eight years. 30 (iii) Notwithstanding any other provision of this paragraph or any 31 provision of paragraph (bb) of subdivision two of section four hundred 32 sixty-three of this title, the commissioner may renew any certificate of 33 registration that was issued to a franchisor, manufacturer, distributor, 34 distributor branch or factory branch, as such terms are defined in 35 section four hundred sixty-two of this title, or to any subsidiary, 36 affiliate or controlled entity thereof, prior to March twenty-sixth, two 37 thousand fourteen; provided, however, that such franchisor, manufactur- 38 er, distributor, distributor branch or factory branch, or any subsid- 39 iary, affiliate or controlled entity thereof, is a manufacturer that 40 manufactures or assembles exclusively zero emissions vehicles, or is a 41 subsidiary, affiliate, or controlled entity of such a manufacturer; and 42 provided further that a controlling interest in such original franchi- 43 sor, manufacturer, distributor, distributor branch or factory branch or 44 any subsidiary, affiliate or controlled entity was not transferred, sold 45 or conveyed to another person or entity, other than to a subsidiary, 46 affiliate or controlled entity of such franchisor, manufacturer, 47 distributor, distributor branch or factory branch. For purposes of this 48 paragraph, zero emission vehicles shall have the same meaning as under 49 part two hundred eighteen of title six of the New York code of rules and 50 regulations. 51 § 3. Subdivision 1 of section 463 of the vehicle and traffic law is 52 amended by adding a new paragraph (e) to read as follows: 53 (e) To sell, or sell exclusively an extended service contract, 54 extended maintenance plan or similar product, including, but not limited 55 to, gap products offered, endorsed or sponsored by the franchisor by the 56 following means:A. 7844--B 3 1 (1) by a statement made by the franchisor that failure to do so will 2 substantially and adversely impact the dealer; or 3 (2) by a provision in a franchise agreement that the dealer sell, or 4 sell exclusively an extended service contract, extended maintenance plan 5 or similar product offered, endorsed or sponsored by the franchisor; or 6 (3) by measuring the dealer's performance under the franchise based on 7 the sale of extended service contracts, extended maintenance plans or 8 similar products offered, endorsed or sponsored by the manufacturer or 9 distributor; or 10 (4) by requiring the dealer to exclusively promote the sale of 11 extended service contracts, extended maintenance plans or similar 12 products offered, endorsed or sponsored by the franchisor. 13 Nothing in this section shall prohibit a franchisor from: 14 (A) providing incentives to a dealer that makes the voluntary decision 15 to sell or sell exclusively an extended service contract, extended main- 16 tenance plan or similar product, including, but not limited to, gap 17 products offered, endorsed or sponsored by the franchisor, or 18 (B) requiring that a dealer that sells an extended service contract, 19 extended maintenance plan, or similar product that is not offered, 20 endorsed or sponsored by the franchisor, disclose to the consumer the 21 disclosures required under section seven thousand nine hundred five of 22 the insurance law, and a separate statement, acknowledged by the consum- 23 er, that the extended service contract, extended maintenance plan or 24 similar product is not offered, endorsed or sponsored by the franchisor, 25 if that is the case. 26 § 4. Paragraph (b) of subdivision 2 of section 463 of the vehicle and 27 traffic law, as amended by chapter 490 of the laws of 2008, is amended 28 to read as follows: 29 (b) To directly or indirectly coerce or attempt to coerce any fran- 30 chised motor vehicle dealer to enter into any agreement with such fran- 31 chisor or officer, agent or other representative thereof, or to do any 32 other act prejudicial to the monetary interests or property rights of 33 said dealer by threatening to [ cancel any unexpired contractual agree-34 ment existing between such franchisor and] terminate said dealer. 35 Provided, however, that good faith notice to any franchised motor vehi- 36 cle dealer of said dealer's violation of any terms or provisions of such 37 franchise shall not constitute a violation of this article. 38 § 5. Paragraph (c) of subdivision 2 of section 463 of the vehicle and 39 traffic law, as amended by chapter 490 of the laws of 2008, is amended 40 to read as follows: 41 (c) (1) To condition the renewal or extension of a franchise on a 42 franchised motor vehicle dealer's substantial renovation of the dealer's 43 place of business or on the construction, purchase, acquisition or 44 rental of a new place of business by the franchised motor vehicle dealer 45 unless the franchisor has advised the franchised motor vehicle dealer in 46 writing of its intent to impose such a condition within a reasonable 47 time prior to the effective date of the proposed date of renewal or 48 extension (but in no case less than one hundred eighty days) and 49 provided the franchisor demonstrates the need for such change in the 50 place of business and the reasonableness of such demand in view of the 51 need to service the public and the economic conditions existing in the 52 automobile industry at the time such action would be required of the 53 franchised motor vehicle dealer. As part of any such condition the fran- 54 chisor shall agree, in writing, to supply the dealer with a reasonable 55 quantity and mix of additional new motor vehicles which, as determined 56 by a reasonable analysis of market conditions, are projected to meet theA. 7844--B 4 1 sales levels necessary to support the increased overhead incurred by the 2 franchised motor vehicle dealer by reason of such renovation, 3 construction, purchase, acquisition or rental of a new place of busi- 4 ness. 5 (2) To require a franchised motor vehicle dealer to purchase goods, 6 building materials, or services for the dealer's place of business, 7 including, but not limited to, office furniture, design features, floor- 8 ing, and wall coverings, from a vendor chosen by the franchisor if 9 goods, building materials, or services of substantially similar quality 10 and design are available from other sources, provided, however, that the 11 goods or building materials are not subject to the franchisor's intel- 12 lectual property or trademark rights and the franchised motor vehicle 13 dealer has received the franchisor's approval, which approval may not be 14 unreasonably withheld. Nothing in this subdivision shall be construed to 15 allow a franchised motor vehicle dealer to impair or eliminate a 16 franchisor's intellectual property or trademark rights and trade dress 17 usage guidelines, or to impair other intellectual property interests 18 owned or controlled by the franchisor. 19 (3) Except as necessary to comply with a health or safety law, or to 20 comply with a technology requirement, which is necessary to sell or 21 service a motor vehicle that the franchised motor vehicle dealer is 22 authorized or licensed by the franchisor to sell or service, to require 23 a franchised motor vehicle dealer to construct a new dealer facility or 24 substantially alter or remodel an existing dealer facility before the 25 date that is ten years after the date the construction of the new dealer 26 facility or such alteration or remodeling at that location was completed 27 and shall continue with any successor owner provided such owner has been 28 designated and approved by the franchisor in the franchise agreement, 29 and such construction, alteration or remodeling substantially complied 30 with the franchisor's brand image standards or plans that the franchisor 31 provided at the time the construction, alteration, or remodeling was 32 completed. 33 (i) As used in this subparagraph, "substantially alter": 34 (A) refers to an alteration that has a major impact on the architec- 35 tural features, characteristics, or integrity of a structure or lot; and 36 (B) does not include routine maintenance, such as interior painting, 37 reasonably necessary to keep a dealership facility in attractive condi- 38 tion. 39 (ii) Nothing in this paragraph shall prohibit a franchisor from: 40 (A) continuing a facility improvement program that is in effect as of 41 the effective date of this paragraph with more than one franchised motor 42 vehicle dealer in the state or to renewing or modifying such program; or 43 (B) providing lump sum or regularly-scheduled payments to assist a 44 franchised motor vehicle dealer in making a facility improvement, 45 including construction, alteration or remodeling, or installing signage 46 or a franchisor image element; 47 (C) providing reimbursement to a franchised motor vehicle dealer on 48 reasonable, written terms for a portion of the franchised motor vehicle 49 dealer's cost of making a facility improvement, including construction, 50 alteration or remodeling, the purchase of goods, building materials or 51 services, or installing signage or a franchisor image element. 52 (4) To deny a franchised motor vehicle dealer a franchisor image 53 element payment, incentive or allowance if the franchised motor vehicle 54 dealer, with the franchisor's approval, began construction, alterations 55 or remodeling intended to comply with the franchisor's image element 56 program before the franchisor substantially changed or terminated theA. 7844--B 5 1 program prior to the program's scheduled ending date provided the dealer 2 is otherwise eligible for program payments and provided that after such 3 substantial change or termination, the compensation payable to the deal- 4 er shall be limited to image element payments, incentives or allowances 5 that the dealer would have earned through program's scheduled ending 6 date, provided that the dealer complies with all program requirements, 7 and provided, further, that such program or payments are not otherwise 8 prohibited by law or regulation. 9 (5) To require or attempt to require a franchised motor vehicle dealer 10 to establish or maintain exclusive dealership facilities unless justi- 11 fied by current and reasonably expected future economic conditions 12 existing in the dealer's relevant market area at the time the request 13 for exclusive facilities is made; provided that the foregoing shall not 14 restrict the terms and conditions of any agreement for which the dealer 15 has voluntarily accepted valuable consideration separate from the fran- 16 chised motor vehicle dealer's right to sell and service motor vehicles 17 for the franchisor. The fact that local market share, facing competitive 18 brand dealerships have exclusive dealership facilities shall constitute 19 evidence that current economic conditions may justify the requirement to 20 establish and maintain exclusive dealership facilities. 21 (6) To require a site control provision regarding the dealer's place 22 of business to survive or continue after the termination of such deal- 23 er's franchise if the termination is due to the discontinuation of the 24 line-make that was the subject of the agreement. 25 § 6. Paragraph (o) of subdivision 2 of section 463 of the vehicle and 26 traffic law, as amended by chapter 490 of the laws of 2008, is amended 27 to read as follows: 28 (o) (1) Upon a termination of a franchise by a franchisor or fran- 29 chised motor vehicle dealer under this article, to refuse to accept a 30 return of new and unused current model motor vehicle inventory which has 31 been acquired from the franchisor, new and unused noncurrent model motor 32 vehicle inventory which has been acquired from the franchisor within one 33 hundred [ twenty] eighty days of the effective date of the termination; 34 supplies, parts, equipment, signage, special tools, and furnishings 35 purchased from the franchisor or its approved sources [ and special36 tools]. The obligation of the franchisor, except with respect to signage 37 shall be limited to the repurchase of the above property which is unal- 38 tered and undamaged, in good and useable condition, and, in the case of 39 supplies, parts and equipment to those items which are currently listed 40 in the franchisor's supplies and parts list. In the case of signage, 41 the franchisor shall be obligated to repurchase any franchisor required 42 signage, purchased within the five years preceding termination and which 43 is in good and useable condition less depreciation as set forth in the 44 Internal Revenue Code of one-fifteenth of the initial cost per year 45 starting the year following the dealer's acquisition of the item. 46 Furthermore, the obligation of the franchisor to repurchase supplies 47 upon a termination, cancellation or nonrenewal by a franchised motor 48 vehicle dealer shall be limited to supplies mandated by the franchisor. 49 Parts eligible for repurchase shall include parts which have been renum- 50 bered in the current parts list but which are identical in design and 51 material to the currently numbered part. The return rights afforded the 52 franchised motor vehicle dealer under the provisions of the paragraph 53 shall be in addition to those, if any, provided in the franchise agree- 54 ment. 55 (2) The franchisor shall pay fair and reasonable compensation for the 56 above described property upon repurchase. In the case of new motor vehi-A. 7844--B 6 1 cle inventory, accessories and parts, fair and reasonable compensation 2 shall in no instance be less than the net acquisition price paid by the 3 franchised motor vehicle dealer to the franchisor or its approved sourc- 4 es. Upon a termination of a franchise by a franchisor, within thirty 5 days of such termination, the franchisor shall send to the franchised 6 motor vehicle dealer instructions on the methodology by which the fran- 7 chised motor vehicle dealer must ship the above described property to 8 the franchisor; the franchisor shall then remit payment for such proper- 9 ty to the franchised motor vehicle dealer within sixty days after 10 receipt of such property. 11 (3) Upon a termination of a franchise by a franchised motor vehicle 12 dealer where the franchise consists primarily of the distribution and 13 sale of house coaches, the franchisor's repurchase obligations set forth 14 in this paragraph shall not apply. 15 (4) In addition to any other requirements of this subdivision, in the 16 event a franchisor terminates a franchise due to termination of a line 17 make, the franchisor shall compensate the dealer for any franchisor 18 required facility construction, alterations or remodeling, or 19 construction, alterations or remodeling required for participation in 20 any incentive programs which were completed by the dealer within three 21 years of the date the franchisor announced the termination of the line 22 make. For the purposes of this section, completion shall be deemed to 23 occur at the later of the franchisor's final approval of the 24 construction, alterations, or remodeling or the issuance of a certif- 25 icate of occupancy. The compensation required under this section shall 26 be in an amount equal to the dealer's cost for the facility upgrades 27 less any assistance provided to the dealer within three years of the 28 date the franchisor announced the termination of the line make by the 29 manufacturer or distributor, and less the amount for depreciation as set 30 forth in Internal Revenue Code of one thirty-ninth of the total initial 31 cost of such construction, alterations, or remodeling per year starting 32 the year following the dealer's completion of the facility construction, 33 alterations, or remodeling. 34 (5) In addition to the requirements of subparagraph four of this para- 35 graph, in the event a franchisor terminates a franchise due to a termi- 36 nation of a line make, the franchisor shall compensate the dealer in an 37 amount equal to the amount remaining on the terminated dealer's manage- 38 ment computer system lease or contract, or one year of lease payments, 39 whichever is less if the dealer management computer system will no long- 40 er be utilized as a result of the termination and the franchisor 41 required the dealer to utilize the particular dealer management computer 42 system. 43 § 7. Paragraph (z) of subdivision 2 of section 463 of the vehicle and 44 traffic law, as amended by chapter 490 of the laws of 2008, is amended 45 to read as follows: 46 (z) To [ charge back or otherwise hold liable a franchised motor vehi-47 cle dealer for sales incentives or charges related to a] refuse to allo- 48 cate, sell, or deliver motor vehicles, to charge back or withhold 49 payments or other things of value for which the franchisee is otherwise 50 eligible, or to take or threaten to take any adverse action against a 51 franchised motor vehicle dealer, in connection with or as a result of 52 any new motor vehicle sold by the franchised motor vehicle dealer and 53 subsequently exported, providing such dealer can demonstrate that he 54 exercised due diligence and that the sale was made in good faith [ and55 without knowledge] including that the dealer did not know nor reasonably 56 should have known of the purchaser's intention to export the motor vehi-A. 7844--B 7 1 cle[ , or that such dealer reasonably relied on approvals from the fran-2 chisor to complete a sale]. A franchised motor vehicle dealer which 3 causes a new motor vehicle to be registered in this state or in a 4 foreign state and causes to be collected the appropriate sales and use 5 tax, or that reasonably relied on a franchisor to complete a sale shall 6 be presumed to have exercised good faith and due diligence. Prior to 7 taking an adverse action, including a charge back, as a result of an 8 export, a franchisor shall provide written notice to the franchised 9 motor vehicle dealer of the adverse action, and, if a charge back, the 10 specific amount of the charge back, and the vehicle or vehicles at 11 issue. A dealer shall not be liable for the delivery of any vehicle sold 12 through a franchisor's fleet program for any such delivery in which the 13 sale or lease was not initiated or negotiated by the dealer and its 14 function was to provide delivery on behalf of the franchisor. 15 § 8. Subparagraph 2 of paragraph (bb) of subdivision 2 of section 463 16 of the vehicle and traffic law, as amended by chapter 490 of the laws of 17 2008, is amended to read as follows: 18 (2) when operating such franchise temporarily under a plan with an 19 independent individual who is obligated to make a significant investment 20 in the dealership that is subject to loss and has an ownership interest 21 or expects to acquire full ownership in a reasonable period under 22 reasonable terms and conditions, provided that a reasonable period shall 23 be presumed to not exceed eight years; provided, however, that the 24 exception provided in this subparagraph shall not apply to any franchi- 25 sor, manufacturer, distributor, distributor branch or factory branch 26 that holds a certificate or registration pursuant to subparagraph (iii) 27 of paragraph f of subdivision seven of section four hundred fifteen of 28 this title. 29 § 9. Subdivision 2 of section 463 of the vehicle and traffic law is 30 amended by adding three new paragraphs (ii), (jj) and (kk) to read as 31 follows: 32 (ii) To allocate new motor vehicles to a franchised motor vehicle 33 dealer based on a program that differentiates between vehicle sales by a 34 franchised motor vehicle dealer within a territory or geographic area 35 assigned to such dealer and vehicle sales outside of such territory or 36 geographic area. 37 (jj) To utilize a discriminatory, unreasonable, arbitrary or unfair 38 system of allocation of new motor vehicle inventory. A franchisor shall 39 communicate its system of allocation in writing in a clear and concise 40 manner to all same line-make dealers located in this state. 41 (kk) To refuse to disclose to any franchised motor vehicle dealer the 42 manner and mode of distribution of vehicles in the franchised motor 43 vehicle dealer's line make within the state, and an explanation of the 44 allocation system, including the methodology used, in a clear and 45 comprehensible form. 46 § 10. Subdivision 1 of section 465 of the vehicle and traffic law, as 47 amended by chapter 490 of the laws of 2008, is amended to read as 48 follows: 49 1. Every franchisor shall properly fulfill any warranty agreement 50 and/or franchisor's service contract and shall compensate each of its 51 franchised motor vehicle dealers for warranty parts and labor in amounts 52 which reflect [ fair and] reasonable compensation for such work. All 53 warranty claims and/or claims under a franchisor's service contract made 54 by franchised motor vehicle dealers shall be paid within thirty days 55 following their approval. For parts reimbursement, other than compo- 56 nents, systems, fixtures, appliances, furnishings, accessories andA. 7844--B 8 1 features of a house coach that are designed, used and maintained prima- 2 rily for nonvehicular residential purposes, and for labor reimbursement, 3 [ fair and] reasonable compensation shall not be less than the price and 4 rate charged by the franchised motor vehicle dealer for like services to 5 non-warranty and/or non-service contract customers. For purposes of this 6 section, the price and rate charged by the franchised motor vehicle 7 dealer for parts may be established by submitting to the franchisor one 8 hundred sequential nonwarranty customer-paid service repair orders or 9 the number of sequential nonwarranty customer-paid service repair orders 10 written within a ninety day period, whichever is less, covering repairs 11 made no more than one hundred eighty days before the submission, and 12 declaring the price and rate, including average markup for the fran- 13 chised motor vehicle dealer as its reimbursement rate. The reimbursement 14 rate so declared shall go into effect thirty days following the declara- 15 tion and shall be presumed to be [ fair and] reasonable, however a fran- 16 chisor may rebut such presumption by showing that such rate so estab- 17 lished is [ unfair and] unreasonable in light of the practices of all 18 other franchised motor vehicle dealers in the vicinity offering the same 19 line make. The franchised motor vehicle dealer shall not request a 20 change in the reimbursement rate more often than [ twice] once in each 21 calendar year. In establishing the labor reimbursement rate, the fran- 22 chisor shall not require a franchised motor vehicle dealer to establish 23 said rate by a methodology, or by requiring information, that is unduly 24 burdensome or time consuming to provide, including, but not limited to, 25 a transaction by transaction calculation. For the purposes of this 26 section, the following parts or types of repairs shall be excluded from 27 the parts and/or labor calculations and the franchisor's reimbursement 28 requirements under this section: (a) parts sold at wholesale; (b) tires; 29 (c) routine maintenance not covered under any retail customer warranty 30 such as fluids, filters and belts not provided in the course of repairs; 31 (d) vehicle reconditioning; and (e) batteries replaced as part of a 32 routine maintenance operation. If the franchisor rejects the declaration 33 or attempts to rebut the declaration because of an error in the dealer's 34 submission, the franchisor shall identify with specificity the reason 35 for rejection and identify the error or errors within the submission. In 36 the event the franchisor rejects or rebuts the dealer's initial declara- 37 tion, the dealer shall have the opportunity, within sixty days to resub- 38 mit the full and corrected declaration addressing the alleged error or 39 errors identified by the franchisor. The franchisor shall respond with- 40 in sixty days. The one hundred eighty day requirement for the repair 41 orders shall be stayed from the date of initial submission. In any 42 action or proceeding held pursuant to this subdivision, the franchisor 43 shall have the burden of proving that the rate declared by the dealer 44 was unreasonable as described in this subdivision and that the proposed 45 adjustment of the average percentage markup or rejection of the 46 submission is reasonable pursuant to the provisions of this subdivision. 47 § 11. Subdivisions 3, 4, 6 and 7 of section 465 of the vehicle and 48 traffic law, as added by chapter 490 of the laws of 2008, are amended to 49 read as follows: 50 3. No franchisor shall conduct an audit or charge back any warranty 51 [ or] payment, or any sales [ incentive payment], advertising or marketing 52 incentive payment ("incentive payments") or otherwise hold a franchised 53 motor vehicle dealer liable for charges more than one year, or five 54 years in the case of fraud, after the date the franchisor made such 55 payment to the dealer, without providing a notice to a franchised motor 56 vehicle dealer of, or a mechanism that makes available to a franchisedA. 7844--B 9 1 motor vehicle dealer, information regarding errors or issues regarding 2 such dealer's warranty, sales, advertising or marketing incentive claims 3 that are the subject of the audit or chargeback. Nothing in this section 4 shall be deemed to grant a dealer the right to access any file held by 5 the manufacturer evaluating such dealer. In connection with a claim for 6 warranty reimbursements, the dealer's failure to document properly one 7 part of a warranty repair that contains more than one part shall not be 8 the sole basis to charge back the entire repair. A manufacturer shall 9 not deny a claim submitted under this section based solely on a dealer's 10 incidental failure to comply with a specific claim processing require- 11 ment, a clerical error, or other administrative technicality, provided 12 that the failure does not call into question the legitimacy of the claim 13 and that the dealer corrects the claim according to franchisor guide- 14 lines. 15 4. A franchisor shall not charge a dealer back subsequent to the 16 payment of a warranty [ or], sales [ incentive], advertising or marketing 17 incentive claim unless a representative of the franchisor has met in 18 person at the dealership, or by telephone, with an officer or employee 19 of the dealer designated by the dealer and explained in detail the basis 20 for each of the proposed charge backs and thereafter given the dealer's 21 representative a reasonable opportunity at the meeting, or during the 22 telephone call, to explain the dealer's position relating to each of the 23 proposed charge backs. In the event the dealer was selected for audit or 24 review on the basis that some or all of the dealer's claims were viewed 25 as excessive in comparison to average, mean or aggregate data accumu- 26 lated by the franchisor, or in relation to claims submitted by a group 27 of other franchisees, the franchisor shall, at or prior to the meeting 28 or telephone call with the dealer's representative, provide the dealer 29 with a written statement containing the basis or methodology upon which 30 the dealer was selected for audit or review. 31 6. A franchisor shall not deny or charge back a sales [ incentive], 32 advertising or marketing incentive payment made to a dealer unless the 33 claim was materially false or fraudulent or [ that] the dealer failed to 34 reasonably substantiate the claim [ either] in accordance with the 35 manufacturer's reasonable procedures. 36 7. After all internal dispute resolution processes provided through 37 the franchisor have been resolved, the franchisor shall give notice to 38 the dealer of the final amount of a proposed warranty [ or], sales 39 [ incentive], advertising or marketing incentive charge back. If the 40 dealer institutes an action pursuant to this article within thirty days 41 of receipt of such notice, the proposed charge back shall be stayed, 42 without bond, during the pendency of such action and until the final 43 judgment has been rendered in an adjudicatory proceeding or action as 44 provided in section four hundred sixty-nine of this article. The fran- 45 chisor shall not impose the chargeback, debit the dealer's account, or 46 otherwise seek to obtain all or any part of the chargeback funds from 47 the dealer during the thirty-day period in which the dealer has the 48 opportunity to file an action as set forth above. 49 § 12. Severability. If any clause, sentence, paragraph, section or 50 part of this act shall be adjudged by any court of competent jurisdic- 51 tion to be invalid and after exhaustion of all further judicial review, 52 the judgment shall not affect, impair or invalidate the remainder there- 53 of, but shall be confined in its operation to the clause, sentence, 54 paragraph, section or part of this act directly involved in the contro- 55 versy in which the judgment shall have been rendered. 56 § 13. This act shall take effect immediately.