AN ACT Relating to motorcycle dealers' franchises; amending RCW 46.70.101 and 46.70.180; adding a new chapter to Title 46 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. This chapter shall be known as the motorcycle dealers' franchise act.

NEW SECTION. Sec. 2. The legislature recognizes it is in the best public interest for manufacturers and dealers of motorcycles to conduct business with each other in a fair, efficient, and competitive manner. The legislature declares the public interest is best served by dealers being assured of the ability to manage their business enterprises under a contractual obligation with manufacturers whereby dealers are able to manage their businesses without unreasonable interference, receive adequate allocations of merchandise in a timely manner at competitive prices, and transfer ownership of their business without undue constraints. These actions will assure the public that motorcycle dealers will devote their best competitive efforts and resources to the sale and service of the manufacturer's products which the dealer has been granted the right to sell and service.

NEW SECTION. Sec. 3. As used in this chapter:

(1) "Franchise" means an oral or written contract, to include a dealer agreement, either expressed or implied, between a franchisor and a motorcycle dealer which purports to fix the legal rights and liabilities between the parties and under which (a) the dealer is granted the right to purchase and resell motorcycles manufactured, distributed, or imported by the franchisor, or leases or purchases the dealership premises; (b) the dealer's business is associated with the trademark, trade name, commercial symbol, or advertisement designating the franchisor or the products distributed by the franchisor; and (c) the dealer's business is reliant on the franchisor for a continued supply of motorcycles, parts, and accessories.

(2) "Department" means the department of licensing.

(3) "Designated family member" means any person, to include a spouse, child, grandchild, parent, brother, or sister of a deceased motorcycle dealer, who is entitled to inherit the dealer's ownership interest in the dealership under the terms of a will or the laws of intestate succession of this state. The term also includes the appointed and qualified personal representative or testamentary trustee of a deceased motorcycle dealer. In the case of an incapacitated dealer, the term shall mean the person appointed by a court as the legal representative of the dealer. However, the term shall be limited to mean only that individual designated by the motorcycle dealer in a written document filed with the manufacturer or distributor, in the event that such a document was filed during the dealer's lifetime.

(4) "Distributor" means a person, whether a resident or nonresident, other than a manufacturer, who sells, leases, or distributes motorcycles to motorcycle dealers, or controls any other person, other than a manufacturer, who sells, leases, or distributes motorcycles to motorcycle dealers.

(5) "Distributor branch" means a branch office maintained by the distributor or wholesaler.

(6) "Distributor representative" means a representative employed by a distributor or wholesaler for the purpose of selling or promoting the sale or lease of the distributor's or wholesaler's motorcycles to motorcycle dealers, or for the purpose of supervising or contacting dealers.

(7) "Established motorcycle dealer" means any motorcycle dealer with a place of business in existence as of the effective date of this act.

(8) "Factory branch" means a branch office maintained by a manufacturer in order to direct and supervise the representatives of the manufacturer.

(9) "Factory representative" means a person employed by a manufacturer for the purpose of making or promoting the sale or lease of the manufacturer's motorcycles to dealers, distributors, or prospective motorcycle dealers.

(10) "Franchisor" means any person who enters into a franchise with a motorcycle dealer.

(11) "Motorcycle" means any motor vehicle which has an unladen weight of less than fifteen hundred pounds, including any parts, accessories, equipment, or special tools designated or intended for use on or with those motor vehicles, excepting farm tractors, golf carts, fire-fighting equipment, and self-propelled lawnmowers; and (a) which is self-propelled and primarily for use and operation, or which is capable of such use and operation, on the public highways and streets; or (b) which is a self-propelled, off-road vehicle, tired or nontired, capable of transporting individuals on or off public highways and streets.

(12) "Motorcycle dealer" means a person operating under a dealer agreement or franchise with a franchisor who is engaged regularly in the business of buying, selling, exchanging, offering, brokering, or leasing with an option to purchase new or used motorcycles in the state, with a place of business in the state.

(13) "New motorcycle" means a motorcycle that has been sold or transferred to a motorcycle dealer and that has not been used for other than demonstration purposes, and on which the original title has not been issued from the motorcycle dealer. The term includes motorcycles not of the current model year comprising part of the dealer's inventory.

(14) "Person" means any natural person, partnership, stock company, corporation, trust, agency, or other legal entity, as well as any individual officers, directors, or other persons in active control of the activities of the entity.

(15) "Place of business" means a permanent, enclosed commercial building, situated within the state, and the real property on which it is located, at which the business of a motorcycle dealer, including the display and repair of motorcycles, may be lawfully conducted in accordance with the terms of all applicable laws and in the building the public may contact the motorcycle dealer or his or her employees at all reasonable times.

(16) "Relevant market area" means any area within a ten-mile radius of a proposed place of business.

NEW SECTION. Sec. 4. Notwithstanding the terms, provisions, or conditions of any franchise or the terms or provisions of any waiver, the following acts or conduct are unlawful and constitute a prohibited trade practice by the manufacturer, distributor, or franchisor, or any of his or her agents, subsidiaries, or employees:

(1) To require, induce, coerce or attempt to require, induce, or coerce, either directly or indirectly, any motorcycle dealer to:

(a) Accept, buy, or order any motorcycle, part or accessory, or any other commodity or service not voluntarily ordered, or requested, or to buy, order, or pay anything of value for such items in order to obtain any motorcycle part, accessory, or other commodity which has been voluntarily ordered or requested;

(b) Order or accept delivery of any motorcycle with special features, accessories, or equipment not included in the list price of the motorcycle as advertised by the manufacturer, except items which have been voluntarily requested or ordered by the dealer, and except items required by law;

(d) Enter into any agreement or sales promotion program by threatening to terminate the franchise of the dealer;

(e) Participate in any advertising campaign, contest, or to purchase any promotional materials, training materials, or showroom or display decorations at the expense of the dealer;

(f) Refrain from participation in the management, investment, acquisition, or sale of any other related product or product line of motor vehicles, parts, or accessories;

(g) Enter into any agreement violating this chapter; or

(h) Enter into an agreement by which the franchisor, manufacturer, factory branch, factory representative, distributor, distributor branch, or distributor representative can directly solicit the dealer's customers.

(2) To terminate, refuse to renew, fail to extend, or fail to renew any franchise without good cause. In determining if good cause exists, the court shall consider, but not exclusively, the following factors:

(a) The amount of business transacted by the dealer as compared to the amount of business available to the dealer;

(b) The investment necessarily made and obligations necessarily incurred by the dealer in the performance of the franchise;

(d) The adequacy of the dealer's new motorcycle sales and service facilities, equipment, and parts;

(e) The qualifications of the management, sales, and service personnel to provide the consumer with reasonably good service and care of new motorcycles;

(f) The failure of the dealer to substantially comply in good faith with the reasonable requirements of the franchise;

(g) Whether dealers are receiving motorcycles, parts, and accessories in quantities promised by the franchisor that dealers have used as a basis for their investment and scope of operations;

(h) That good cause shall not be shown by the franchisor's desire to increase markets;

(i) The effect on the retail motor vehicle business and the consuming public in the relevant market area;

(j) Whether it is injurious to the public welfare for an additional franchise to be established.

The dealer shall be notified, in writing, not less than ninety days before termination or nonrenewal with reasons for the actions. If the termination or nonrenewal is based on termination or discontinuance of the product line, the dealer shall be notified not less than one hundred eighty days prior to termination or nonrenewal. All existing franchises shall continue operation under a newly appointed distributor upon the termination of an existing distributor unless a mutual agreement of termination is filed between the new distributor and the affected dealer.

(3) To require a change in capital structure, or means of financing, if the dealer at all times meets the reasonable, written, and uniformly applied capital standards determined by the manufacturer, franchisor, or distributor;

(4) To prevent or attempt to prevent a dealer from making reasonable changes in the capital structure of a dealership or the means by which the dealership is financed if the dealer meets the reasonable, written, and uniformly applied capital requirements determined by the manufacturer, franchisor, or distributor;

(5) To unreasonably require a change in the location of the dealership or any substantial alterations to the place of business;

(6) To condition renewal or extension of the franchise or substantial renovation of the existing place of business or on the construction, purchase, acquisition, or lease of a new place of business unless written notice is first provided one hundred eighty days prior to the date of renewal or extension and the franchisor demonstrates the need and reasonableness of the requested actions. The franchisor shall agree to supply the dealer with an adequate quantity of motorcycles, parts, and accessories to meet the sales level necessary to support the increased overhead resulting from substantial renovation, construction, acquisition, or lease of a new place of business;

(7) To adopt, establish, or implement a plan or system, or to modify an existing plan or system, for the distribution or allocation of motorcycles which is arbitrary, in bad faith, or unconscionable and which damages the dealer or the dealer's customers;

(8)(a) To fail or refuse to disclose to the dealer, after written request, the basis upon which new motorcycles of the same line are currently or will in the future be allocated or distributed to dealers; (b) to fail or refuse to disclose to dealers, after written request, the total number of new motorcycles of a given model which the manufacturer, franchisor, or distributor has sold during the current model year within the dealer's marketing district, zone, or region;

(9) To refuse or fail to deliver any motorcycle, part, or accessory in reasonable quantities, and within a reasonable time after receipt of the order from the dealer, that is specifically advertised as being immediately available or is actually being delivered to dealers at the time of ordering. It is not a prohibited trade practice for a failure to deliver caused by an act of God, strike, material shortage, or other cause over which the manufacturer, distributor, or franchisor has no control;

(10) To offer a renewal, replacement, or succeeding franchise containing terms substantially modifying the sales and service obligations or capital requirements of the motorcycle dealer, other than as provided for in this chapter;

(11) To sell or lease or offer to sell or lease to a dealer a new motorcycle, including any motorcycle under a sales promotion plan, at a lower price than offered or sold to another dealer for the same model;

(12) To sell or lease or offer to sell or lease any new motorcycle to any person, except employees of the franchisor, manufacturer, or distributor, at a price lower than the price offered to dealers for the same model similarly equipped. The franchisor, manufacturer, or distributor shall not sell more than three new motorcycles to employees in any one model year;

(13) To prevent, attempt to prevent, or unreasonably disapprove any motorcycle dealer from changing executive management control of the dealer's motorcycle business, unless the change results in control by a person not of good moral character or who does not meet the manufacturer, distributor, or franchisor's existing and reasonable, written, and uniformly applied capital standards. The dealer shall be given written notice of the reasons for rejection within thirty days of receipt of notice from the dealer of a proposed change;

(14) To reject, prevent, or attempt to prevent any person from selling or transferring a controlling interest to any other person unless the buyer or transferee does not qualify under appropriate state law as a licensed dealer, is not of good moral character, does not meet the manufacturer, distributor, or franchisor's existing and reasonable, written, and uniformly applied capital standards, or does not meet the written and uniformly applied manufacturer, distributor, or franchisor business experience standards for the market area. The dealer shall be given written notice setting forth the reasons for rejection of the proposed sale or transfer within thirty days of notice by the dealer of the sale or transfer;

(15) To increase the price of any vehicle or part ordered by the dealer for a retail customer prior to the dealer's receipt of written notification of official prior price increases. A sales order signed by the customer constitutes evidence of an order;

(16) To fail to hold harmless and indemnify any motorcycle dealer against losses, including lawsuits and court costs, arising from: (a) The manufacture or performance of any motorcycle, part, or accessory; (b) damage to merchandise in transit where the manufacturer, distributor, or franchisor specifies the carrier; (c) the manufacturer, distributor, or franchisor's failure to jointly defend product liability suits concerning the motorcycle, part, or accessory provided to the dealer; or (d) any other act performed by the manufacturer, distributor, or franchisor;

(17) To unfairly prevent or attempt to prevent a motorcycle dealer from receiving reasonable compensation for the value of a motorcycle;

(18) To release confidential information provided by the motorcycle dealer to the manufacturer, distributor, or franchisor without the written prior consent of the dealer;

(19) To fail to pay to a motorcycle dealer, within a reasonable time following receipt of a valid claim, any payment agreed to be made by the manufacturer, distributor, or franchisor on grounds that a new motorcycle, or a prior year's model, is in the dealer's inventory at the time of introduction of new model motorcycles;

(20) To deny any dealer the right of free association with any other dealer for any lawful purpose;

(21) To enter into a franchise which has a duration of less than five years;

(22) To permit factory authorized service to be performed upon motorcycles or accessories by persons other than their franchised motorcycle dealers;

(23) To fail to supply monthly to any motorcycle dealer at least the number of motorcycles of each make, model, and series ordered by the dealer to achieve a percentage of total new motorcycle sales of each make, model, and series covered under the franchise;

(24) To own, operate, or control any motorcycle dealer or place of business in the state;

(25) To artificially and intentionally create a shortage of any motorcycle make, model, or series that results in the inequitable distribution of the make, model, or series to dealers; or

(26) To sell, lease, or provide, either at wholesale or retail, motorcycles, parts, or accessories within the market area designated in a franchise to third parties other than the dealer having the franchise with the manufacturer, distributor, or franchisor.

NEW SECTION. Sec. 5. (1) The manufacturer, distributor, or franchisor shall not prevent, attempt to prevent, refuse to give effect to, attempt to refuse to give effect to, or in any way hinder the succession to the ownership, management, control, or continuance of a dealer's motorcycle business by a designated family member upon the death or incapacity of the dealer, except as otherwise provided in this chapter.

(2) A designated family member, at his or her discretion, may succeed the dealer in ownership or management control under the existing agreement. The designated family member shall provide notice to the franchisor, in writing, of the intention to succeed to the franchise within one hundred twenty days after the dealer's death or incapacity. The designated family member shall agree to be bound by the terms of the original franchise. The designated family member shall meet the reasonable, written, and uniformly applied conditions applied by the franchisor under the existing franchise.

(3) A designated family member may only be rejected for succession on reasonable grounds. The franchisor shall provide written notice to the designated family member within sixty days of receipt of notice of the intention to succeed. The notice shall state the specific grounds for refusal, termination, or nonrenewal of the franchise and shall not take effect less than ninety days after receipt of the notice by the designated family member. If notice is not served within the designated time period, the franchise shall continue in effect with the designated family member.

(4) The designated family member may appeal to the appropriate court within ninety days of receipt of notice of refusal, termination, or nonrenewal. The franchisor has the burden of proving reasonable grounds. A designated family member prevailing in such action shall recover reasonable costs and attorney's fees.

(5) A dealer may designate any person as the recipient of the franchise by filing a written instrument with the franchisor. The written instrument shall be controlling and binding on all heirs and testamentary successors. The recipient shall agree to be bound by the terms of the original franchise. The recipient shall meet the reasonable, written, and uniformly applied conditions applied by the franchisor under the existing franchise.

NEW SECTION. Sec. 6. (1) A manufacturer, distributor, or franchisor desiring to enter into a franchise establishing or relocating a motorcycle dealer shall notify, in writing, the department and each existing franchised dealer in the relevant market area of its intention to establish or relocate a dealer. Within one hundred twenty days of receiving the notice, or within one hundred twenty days after the end of any appeal period procedure provided by the franchisor, whichever is later, any existing franchised dealer to whom the franchisor is required to give notice under this subsection may file a contested case proceeding under chapter 34.04 RCW challenging the proposed establishment or relocation of the dealership within the relevant marketing area of the existing franchised dealer.

(2) Authority to enter into a franchise establishing or relocating a dealer shall only be granted by the manufacturer, distributor, or franchisor proving just cause. In determining if just cause exists, the department and any court shall consider the existing circumstances, including but not limited to:

(a) The amount of business transacted by existing dealers when compared with the amount of business available to them;

(b) The permanency of the investment necessarily made and the obligations incurred by existing dealers in the performance of their franchise agreements;

(d) Whether it is injurious to the public welfare for the proposed dealer to be established or relocated;

(e) Whether the existing dealers are providing adequate customer care for the motorcycles sold, including the adequacy of motorcycle service facilities;

(f) Whether the existing dealers are receiving vehicles and parts in quantities promised by the manufacturer, factory branch, distributor, or franchisor, and on what volume of promised quantities existing dealers based their investment and scope of operations;

(g) The effect on the retail motor vehicle business and the consuming public in the relevant market area; and

(h) Whether it is injurious to the public welfare for an additional franchise to be established.

For the purposes of this section, the reopening of a dealer's place of business that has been closed for less than six months at the original location is not the establishment or relocation of a dealer.

(3) Before a franchisor offers a new motorcycle model, line, or product for resale to a new dealer whose relevant market area includes the place of business of an existing dealer of the franchisor, the franchisor shall first offer the new model, line, or product to the existing dealer in a writing that contains all of the conditions for marketing that new model, line, or product. The franchisor shall impose the same conditions on all persons marketing the new model, line, or product. The franchisor shall not offer the new motorcycle model, line, or product to any other person until either sixty days has elapsed after receipt of the existing dealer under franchise of the offer of the new model, line, or product, or the existing dealer has rejected its offer, whichever occurs first. A person selling a new motorcycle model, line, or product after rejection by an existing dealer, or the lapse of sixty days, is not an existing dealer for the purposes of this subsection with respect to any subsequent new motorcycle model, line, or product.

(4) Any renewal of an existing franchise which occurs on or after January 1, 1985, or any new franchise which is executed on or after January 1, 1985, shall include all motorcycle models, types, or products which are under separate franchises to the dealer.

NEW SECTION. Sec. 7. (1) Upon the termination or nonrenewal of a franchise, the dealer shall be paid fair and reasonable compensation by the franchisor for all new motorcycle inventory, including new motorcycles not of the current model year, purchased from the manufacturer, distributor, or franchisor that has not been materially altered, damaged, or driven more than fifty miles. Compensation may in no instance be less than the current price charged by the manufacturer, distributor, or franchisor for the items.

(2) Upon the termination or nonrenewal of a franchise, the dealer shall be paid fair and reasonable compensation for:

(a) All parts and accessories received from the manufacturer, distributor, or franchisor;

(b) Equipment, furnishings, and signs purchased from the manufacturer, distributor, or franchisor; and

Compensation for the items specified in this subsection shall not be less than the current price charged by the manufacturer, distributor, or franchisor for such items.

(3) In the event of termination or nonrenewal of the franchise by the franchisor, the franchisor shall pay the dealer a sum equal to the fair rental value of the place of business for a period of three years from the effective date of termination or nonrenewal, or the remainder of any lease, whichever is less. The dealer shall make available to the franchisor the use and possession of the business premises and the dealer shall have an obligation to mitigate damages.

(4) In the event of termination or nonrenewal of the franchise by the franchisor, the franchisor shall use best efforts to locate a purchaser for the dealer's place of business at a reasonable price if the franchisor required the dealer, as a condition of granting the franchise, to purchase the place of business. In addition, the franchisor shall pay to the dealer a sum equal to the current fair market value of the established place of business for a period of three years from the effective date of termination or nonrenewal of the franchise, or until the place of business is sold, whichever is less.

(5) In the event of termination or nonrenewal of the franchise by the franchisor without good cause, the franchisor shall pay the dealer fair and reasonable compensation for the value of the dealership within six months of the effective date of the termination or nonrenewal.

(6) Subsections (3) through (5) of this section do not apply if the dealer has acted fraudulently in the procurement of the franchise, or has acted fraudulently in the operation of the franchise.

NEW SECTION. Sec. 8. (1) The manufacturer, distributor, or franchisor shall compensate the dealer for labor, parts, and other expenses incurred to comply with the manufacturer, distributor, or franchisor's warranty agreements, and for work and services performed in connection with delivery and preparation of motorcycles received from the manufacturer, distributor, or franchisor. The compensation shall not be less than the rates charged by the dealer for like services and parts to retail customers.

(2) All claims for compensation made by the dealer shall be paid within thirty days after approval and shall be approved or disapproved within thirty days of their receipt by the manufacturer, distributor, or franchisor. Any denial of claim shall be in writing and shall set forth the specific grounds for denial.

(3) A claim that has been approved and paid shall not be charged back to the dealer unless it is established the claim was false or fraudulent, that the repairs were not properly made or were unnecessary to correct the defective condition, or the dealer failed to reasonably substantiate the claim.

NEW SECTION. Sec. 9. No manufacturer, distributor, or franchisor shall require, coerce, or induce any dealer to sell, assign, or transfer a retail sales installment contract, or require the dealer to act as an agent for any manufacturer, distributor, or franchisor in the securing of a promissory note, a security agreement given in connection with the sale of a motorcycle, or securing of a policy of insurance for a motorcycle. The manufacturer, distributor, or franchisor shall not condition the handling of motorcycles by the dealer on the sale, assignment, or transfer of a retail sales installment contract to a specified finance company, class of companies, or any other person.

NEW SECTION. Sec. 10. Any person injured by a violation of this chapter may bring a civil action in a court of competent jurisdiction to enjoin further violations or to recover damages. Injunctive relief may be granted in an action brought under this chapter without the dealer being required to post a bond if, in the opinion of the court, there exists a likelihood the dealer may prevail upon the merits.

NEW SECTION. Sec. 11. Except as otherwise provided in this chapter, any civil action under this chapter shall be brought within four years after discovery by the aggrieved party of the facts constituting a violation of this chapter.

Sec. 12. Section 11, chapter 74, Laws of 1967 ex. sess. as last amended by section 5, chapter 152, Laws of 1981 and RCW 46.70.101 are each amended to read as follows:

The director may by order deny, suspend, or revoke the license of any vehicle dealer, vehicle manufacturer, or vehicle salesman or, in lieu thereof or in addition thereto, may by order assess monetary penalties of a civil nature not to exceed one thousand dollars per violation, if he finds that the order is in the public interest and that the applicant or licensee:

(1) In the case of a vehicle dealer:

(a) The applicant or licensee, or any partner, officer, director, owner of ten percent or more of the assets of the firm, or managing employee:

(i) Was the holder of a license issued pursuant to this chapter, which was revoked for cause and never reissued by the department, or which license was suspended for cause and the terms of the suspension have not been fulfilled, or which license was assessed a civil penalty and the assessed amount has not been paid;

(ii) Has been adjudged guilty of a crime which directly relates to the business of a vehicle dealer and the time elapsed since the adjudication is less than ten years, or suffering any judgment within the preceding five years in any civil action involving fraud, misrepresentation, or conversion. For the purposes of this section, adjudged guilty shall mean in addition to a final conviction in either a state or municipal court, an unvacated forfeiture of bail or collateral deposited to secure a defendant's appearance in court, the payment of a fine, a plea of guilty, or a finding of guilt regardless of whether the sentence is deferred or the penalty is suspended;

(iii) Has knowingly or with reason to know made a false statement of a material fact in his application for license or any data attached thereto, or in any matter under investigation by the department;

(iv) Does not have an established place of business as defined in this chapter;

(v) Employs an unlicensed salesman or one whose license has been denied, revoked within the last year, or is currently suspended, the terms of which have not been fulfilled;

(vi) Refuses to allow representatives or agents of the department to inspect during normal business hours all books, records, and files maintained within this state;

(vii) Sells, exchanges, offers, brokers, auctions, solicits, or advertises a new or current model vehicle to which a factory new vehicle warranty attaches and fails to have a valid, written service agreement as required by this chapter, or having such agreement refuses to honor the terms of such agreement within a reasonable time or repudiates the same;

(viii) Is insolvent, either in the sense that his liabilities exceed his assets, or in the sense that he cannot meet his obligations as they mature;

(ix) Fails to pay any civil monetary penalty assessed by the director pursuant to this section within ten days after such assessment becomes final;

(x) Fails to notify the department of bankruptcy proceedings in the manner required by RCW 46.70.183.

(b) The applicant or licensee, or any partner, officer, director, owner of ten percent of the assets of the firm, or any employee or agent:

(i) Has failed to comply with the applicable provisions of chapter 46.12 or 46.16 RCW or this chapter or any rules and regulations adopted thereunder;

(ii) Has defrauded or attempted to defraud the state, or a political subdivision thereof of any taxes or fees in connection with the sale or transfer of a vehicle;

(iii) Has forged the signature of the registered or legal owner on a certificate of title;

(iv) Has purchased, sold, disposed of, or has in his possession any vehicle which he knows or has reason to know has been stolen or appropriated without the consent of the owner;

(v) Has wilfully failed to deliver to a purchaser a certificate of ownership to a vehicle which he has sold;

(vi) Has committed any act in violation of RCW 46.70.090 relating to vehicle dealer license plates and manufacturer license plates;

(vii) Has committed any act in violation of RCW 46.70.180 relating to unlawful acts and practices; or

(viii) Has engaged in practices inimical to the health or safety of the citizens of the state of Washington including but not limited to failure to comply with standards set by the state of Washington or the federal government pertaining to the construction or safety of vehicles;

(c) The licensee or any partner, officer, director, or owner of ten percent or more of the assets of the firm holds or has held any such position in any other vehicle dealership licensed pursuant to this chapter which is subject to final proceedings under this section.

(2) In the case of a vehicle salesman:

(a) Was the holder, or was a partner in a partnership or was an officer, director, or owner involved in the management of a corporation which was the holder, of a license issued pursuant to this chapter which was revoked for cause and never reissued, or was suspended and the terms of the suspension had not been fulfilled, or which license was assessed a civil penalty and the assessed amount has not been paid;

(b) Has been adjudged guilty of a crime which directly relates to the business of a vehicle salesman and the time elapsed since the conviction is less than ten years, or suffering any judgment within the preceding five years in any civil action involving fraud, misrepresentation, or conversion. For the purpose of this section, the term adjudged guilty means, in addition to a final conviction in either a state or municipal court, an unvacated forfeiture of bail or collateral deposited to secure a defendant's appearance in court, the payment of a fine, a plea of guilty, or a finding of guilt regardless of whether the imposition of sentence is deferred or the penalty is suspended;

(c) Has knowingly or with reason to know made a false statement of a material fact in his application for license or any data attached thereto or in any matter under investigation by the department;

(d) Has failed to comply with the applicable provisions of chapter 46.12 or 46.16 RCW or this chapter or any rules and regulations adopted thereunder;

(e) Has defrauded or attempted to defraud the state or a political subdivision thereof, of any taxes or fees in connection with the sale or transfer of a vehicle;

(f) Has forged the signature of the registered or legal owner on a certificate of title;

(g) Has purchased, sold, disposed of, or has in his possession, any vehicle which he knows or has reason to know has been stolen or appropriated without the consent of the owner;

(h) Has wilfully failed to deliver to a purchaser a certificate of ownership to a vehicle which he has sold;

(i) Has committed any act in violation of RCW 46.70.180 relating to unlawful acts and practices;

(j) Fails to pay any civil monetary penalty assessed by the director pursuant to this section within ten days after such assessment becomes final;

(k) Converts or appropriates, whether temporarily or permanently, property or funds belonging to a customer, dealer, or manufacturer, without the consent of the owner of such property or funds.

(3) In the case of a manufacturer, or any partner, officer, director, or majority shareholder:

(a) Was or is the holder of a license issued pursuant to this chapter which was revoked for cause and never reissued by the department, or which license was suspended for cause and the terms of the suspension have not been fulfilled, or which license was assessed a civil penalty and the assessed amount has not been paid;

(b) Has knowingly or with reason to know, made a false statement of a material fact in his application for license, or any data attached thereto, or in any matter under investigation by the department;

(c) Has failed to comply with the applicable provisions of chapter 46.12 or 46.16 RCW or this chapter or any rules and regulations adopted thereunder;

(d) Has defrauded or attempted to defraud the state or a political subdivision thereof, of any taxes or fees in connection with the sale or transfer of a vehicle;

(e) Has purchased, sold, disposed of, or has in his possession, any vehicle which he knows or has reason to know has been stolen or appropriated without the consent of the owner;

(f) Has committed any act in violation of RCW 46.70.090 relating to vehicle dealer license plates and manufacturer license plates;

(g) Has committed any act in violation of RCW 46.70.180 relating to unlawful acts and practices;

(h) Sells or distributes in this state or transfers into this state for resale, any new or unused vehicle to which a warranty attaches or has attached and refuses to honor the terms of such warranty within a reasonable time or repudiates the same;

(i) Fails to maintain one or more resident employees or agents to provide service or repairs to vehicles located within the state of Washington only under the terms of any warranty attached to new or unused vehicles manufactured and which are or have been sold or distributed in this state or transferred into this state for resale unless such manufacturer requires warranty service to be performed by all of its dealers pursuant to a current service agreement on file with the department;

(j) Fails to reimburse within a reasonable time any vehicle dealer within the state of Washington, other than a motorcycle dealer governed by chapter 46.-- RCW (sections 1 through 11 of this 1985 act), who in good faith incurs reasonable obligations in giving effect to warranties that attach or have attached to any new or unused vehicle sold or distributed in this state or transferred into this state for resale by any such manufacturer;

(k) Engaged in practices inimical to the health and safety of the citizens of the state of Washington including but not limited to failure to comply with standards set by the state of Washington or the federal government pertaining to the construction and safety of vehicles;

(l) Is insolvent either in the sense that his liabilities exceed his assets or in the sense that he cannot meet his obligations as they mature;

(m) Fails to notify the department of bankruptcy proceedings in the manner required by RCW 46.70.183.

Sec. 13. Section 16, chapter 74, Laws of 1967 ex. sess. as last amended by section 6, chapter 152, Laws of 1981 and RCW 46.70.180 are each amended to read as follows:

Each of the following acts or practices is hereby declared unlawful:

(1) To cause or permit to be advertised, printed, displayed, published, distributed, broadcasted, televised, or disseminated in any manner whatsoever, any statement or representation with regard to the sale or financing of a vehicle which is false, deceptive, or misleading, including but not limited to the following:

(a) That no down payment is required in connection with the sale of a vehicle when a down payment is in fact required, or that a vehicle may be purchased for a smaller down payment than is actually required;

(b) That a certain percentage of the sale price of a vehicle may be financed when such financing is not offered in a single document evidencing the entire security transaction;

(c) That a certain percentage is the amount of the service charge to be charged for financing, without stating whether this percentage charge is a monthly amount or an amount to be charged per year;

(d) That a new vehicle will be sold for a certain amount above or below cost without computing cost as the exact amount of the factory invoice on the specific vehicle to be sold;

(e) That a vehicle will be sold upon a monthly payment of a certain amount, without including in the statement the number of payments of that same amount which are required to liquidate the unpaid purchase price.

(2) To incorporate within the terms of any purchase and sale agreement any statement or representation with regard to the sale or financing of a vehicle which is false, deceptive, or misleading, including but not limited to terms that include as an added cost to the selling price of a vehicle an amount for licensing or transfer of title of that vehicle which is not actually due to the state, unless such amount has in fact been paid by the dealer prior to such sale.

(3) To set up, promote, or aid in the promotion of a plan by which vehicles are to be sold to a person for a consideration and upon further consideration that the purchaser agrees to secure one or more persons to participate in the plan by respectively making a similar purchase and in turn agreeing to secure one or more persons likewise to join in said plan, each purchaser being given the right to secure money, credits, goods, or something of value, depending upon the number of persons joining the plan.

(4) To commit, allow, or ratify any act of "bushing" which is defined as follows: Taking from a prospective buyer of a vehicle a written order or offer to purchase, or a contract document signed by the buyer, which:

(a) Is subject to the dealer's, or his authorized representative's future acceptance, and the dealer fails or refuses within forty-eight hours, exclusive of Saturday, Sunday, or legal holiday, and prior to any further negotiations with said buyer, to deliver to the buyer either the dealer's signed acceptance or all copies of the order, offer, or contract document together with any initial payment or security made or given by the buyer, including but not limited to money, check, promissory note, vehicle keys, a trade-in, or certificate of title to a trade-in; or

(b) Permits the dealer to renegotiate a dollar amount specified as trade-in allowance on a vehicle delivered or to be delivered by the buyer as part of the purchase price, for any reason except substantial physical damage or latent mechanical defect occurring before the dealer took possession of the vehicle and which could not have been reasonably discoverable at the time of the taking of the order, offer, or contract; or

(c) Fails to comply with the obligation of any written warranty or guarantee given by the dealer requiring the furnishing of services or repairs within a reasonable time.

(5) To commit any offense relating to odometers, as such offenses are defined in RCW 46.37.540, 46.37.550, 46.37.560, and 46.37.570.

(6) For any vehicle dealer or vehicle salesman to refuse to furnish, upon request of a prospective purchaser, the name and address of the previous registered owner of any used vehicle offered for sale.

(7) To commit any other offense under RCW 46.37.423, 46.37.424, or 46.37.425.

(8) To commit any offense relating to a dealer's temporary license permit, including but not limited to failure to properly complete each such permit, or the issuance of more than one such permit on any one vehicle.

(9) For a dealer, salesman, or mobile home manufacturer, having taken an instrument or cash "on deposit" from a purchaser prior to the delivery of the bargained-for vehicle, to commingle said "on deposit" funds with assets of the dealer, salesman, or mobile home manufacturer instead of holding said "on deposit" funds as trustee in a separate trust account until the purchaser has taken delivery of the bargained-for vehicle. Failure, immediately upon receipt, to endorse "on deposit" instruments to such a trust account, or to set aside "on deposit" cash for deposit in such trust account, and failure to deposit such instruments or cash in such trust account by the close of banking hours on the day following receipt thereof, shall be evidence of intent to commit this unlawful practice: PROVIDED, HOWEVER, That a motor vehicle dealer may keep a separate trust account which equals his customary total customer deposits for vehicles for future delivery.

(10) For a dealer or manufacturer to fail to comply with the obligations of any written warranty or guarantee given by the dealer or manufacturer requiring the furnishing of goods and services or repairs within a reasonable period of time, or to fail to furnish to a purchaser, all parts which attach to the manufactured unit including but not limited to the undercarriage, and all items specified in the terms of a sales agreement signed by the seller and buyer.

(11) Being a manufacturer, other than a motorcycle manufacturer governed by chapter 46.-- RCW (sections 1 through 11 of this 1985 act), to:

(a) Coerce or attempt to coerce any vehicle dealer to order or accept delivery of any vehicle or vehicles, parts or accessories, or any other commodities which have not been voluntarily ordered by the vehicle dealer: PROVIDED, That recommendation, endorsement, exposition, persuasion, urging, or argument are not deemed to constitute coercion;

(b) Cancel or fail to renew the franchise or selling agreement of any vehicle dealer doing business in this state without fairly compensating the dealer at a fair going business value for his capital investment which shall include but not be limited to tools, equipment, and parts inventory possessed by the dealer on the day he is notified of such cancellation or termination and which are still within the dealer's possession on the day the cancellation or termination is effective, if: (i) The capital investment has been entered into with reasonable and prudent business judgment for the purpose of fulfilling the franchise; and (ii) said cancellation or nonrenewal was not done in good faith. Good faith is defined as the duty of each party to any franchise to act in a fair and equitable manner towards each other, so as to guarantee one party freedom from coercion, intimidation, or threats of coercion or intimidation from the other party: PROVIDED, That recommendation, endorsement, exposition, persuasion, urging, or argument are not deemed to constitute a lack of good faith.

(c) Encourage, aid, abet, or teach a vehicle dealer to sell vehicles through any false, deceptive, or misleading sales or financing practices including but not limited to those practices declared unlawful in this section;

(d) Coerce or attempt to coerce a vehicle dealer to engage in any practice forbidden in this section by either threats of actual cancellation or failure to renew the dealer's franchise agreement;

(e) Refuse to deliver any vehicle publicly advertised for immediate delivery to any duly licensed vehicle dealer having a franchise or contractual agreement for the retail sale of new and unused vehicles sold or distributed by such manufacturer within sixty days after such dealer's order has been received in writing unless caused by inability to deliver because of shortage or curtailment of material, labor, transportation, or utility services, or by any labor or production difficulty, or by any cause beyond the reasonable control of the manufacturer;

(f) To provide under the terms of any warranty that a purchaser of any new or unused vehicle that has been sold, distributed for sale, or transferred into this state for resale by the vehicle manufacturer may only make any warranty claim on any item included as an integral part of the vehicle against the manufacturer of that item.

Nothing in this section may be construed to impair the obligations of a contract or to prevent a manufacturer, distributor, representative, or any other person, whether or not licensed under this chapter, from requiring performance of a written contract entered into with any licensee hereunder, nor does the requirement of such performance constitute a violation of any of the provisions of this section if any such contract or the terms thereof requiring performance, have been freely entered into and executed between the contracting parties.

NEW SECTION. Sec. 14. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 15. Sections 1 through 11 of this act shall constitute a new chapter in Title 46 RCW.