AN ACT Relating to
motor vehicle dealer franchise equity; amending RCW 46.96.120 and 46.96.130;
adding new sections to chapter 46.96 RCW; and recodifying RCW 46.96.120 and
46.96.130.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
NEW SECTION. Sec.
1. (1) For the purposes of
this section, and throughout this chapter, the term "relevant market
area" is defined as follows:
(a) If the population
in the county in which the proposed new or relocated dealership is to be
located is four hundred thousand or more, the relevant market area is the
geographic area within a radius of eight miles around the proposed site;
(b) If the population
in the county in which the proposed new or relocated dealership is to be
located is two hundred thousand or more and less than four hundred thousand,
the relevant market area is the geographic area within a radius of twelve miles
around the proposed site;
(c) If the population
in the county in which the proposed new or relocated dealership is to be
located is less than two hundred thousand, the relevant market area is the
geographic area within a radius of sixteen miles around the proposed site.
In determining population
for this definition, the most recent census by the United States Bureau of
Census or the most recent population update, either from the National Planning
Data Corporation or other similar recognized source, shall be accumulated for
all census tracts either wholly or partially within the relevant market area.
(2) For the purpose of
sections 1 through 5 of this act, the term "motor vehicle dealer"
does not include dealerships who exclusively market vehicles 19,000 pounds
gross vehicle weight and above.
(3) Notwithstanding the
terms of a franchise and notwithstanding the terms of a waiver, if a
manufacturer intends or proposes to enter into a franchise to establish an
additional new motor vehicle dealer or to relocate an existing new motor
vehicle dealer within or into a relevant market area in which the same line
make of motor vehicle is then represented, the manufacturer shall provide at
least sixty days advance written notice to the department and to each new motor
vehicle dealer of the same line make in the relevant market area, of the
manufacturer's intention to establish an additional new motor vehicle dealer or
to relocate an existing new motor vehicle dealer within or into the relevant
market area. The notice shall be sent by certified mail to each such party and
shall include the following information:
(a) The specific
location at which the additional or relocated motor vehicle dealer will be
established;
(b) The date on or
after which the additional or relocated motor vehicle dealer intends to
commence business at the proposed location;
(c) The identity of all
motor vehicle dealers who are franchised to sell the same line make vehicles as
the proposed dealer and who have licensed locations within the relevant market
area;
(d) The names and
addresses, if available, of the owners of and principal investors in the
proposed additional or relocated motor vehicle dealership; and
(e) The specific
grounds or reasons for the proposed establishment of an additional motor
vehicle dealer or relocation of an existing dealer.
NEW SECTION. Sec.
2. (1) Within thirty days
after receipt of the notice under section 1 of this act, or within thirty days
after the end of an appeal procedure provided by the manufacturer, whichever is
greater, a new motor vehicle dealer so notified or entitled to notice may file
a petition with the department protesting the proposed establishment or
relocation. The petition shall contain a short statement setting forth the
reasons for the dealer's objection to the proposed establishment or
relocation. Upon the filing of a protest and the receipt of the filing fee,
the department shall promptly notify the manufacturer that a timely protest has
been filed and shall request the appointment of an administrative law judge
under chapter 34.12 RCW to conduct a hearing. The manufacturer shall not
establish or relocate the new motor vehicle dealer until the administrative law
judge has held a hearing and has determined that there is good cause for
permitting the proposed establishment or relocation. When more than one protest
is filed against the establishment or relocation of the same dealer, the
administrative law judge shall consolidate the hearings to expedite disposition
of the matter.
(2) If a manufacturer
provides in the franchise agreement or by written statement distributed and
provided to its dealers for arbitration under the Washington Arbitration Act,
chapter 7.04 RCW, as a mechanism for resolving disputes relating to the
establishment of an additional new motor vehicle dealer or the relocation of a
new motor vehicle dealer, then the provisions of this section and section 4 of
this act relating to hearings by an administrative law judge do not apply, and
a dispute regarding the establishment of an additional new motor vehicle dealer
or the relocation of an existing new motor vehicle dealer shall be determined
in an arbitration proceeding conducted in accordance with the Washington
Arbitration Act, chapter 7.04 RCW. The thirty-day period for filing a protest
under this section still applies except that the protesting dealer shall file
his protest with the manufacturer within thirty days after receipt of the
notice under section 1 of this act.
(3) The dispute shall
be referred for arbitration to such arbitrator as may be agreed upon by the
parties to the dispute. If the parties cannot agree upon a single arbitrator
within thirty days from the date the protest is filed, the protesting dealer
will select an arbitrator, the manufacturer will select an arbitrator, and the
two arbitrators will then select a third. If a third arbitrator is not agreed
upon within thirty days, any party may apply to the superior court, and the
judge of the superior court having jurisdiction will appoint the third
arbitrator. The protesting dealer will pay the arbitrator selected by him, and
the manufacturer will pay the arbitrator it selected. The expense of the third
arbitrator and all other expenses of arbitration will be shared equally by the
parties. Attorneys' fees and fees paid to expert witnesses are not expenses of
arbitration and will be paid by the person incurring them.
(4) Notwithstanding the
terms of a franchise or written statement of the manufacturer and
notwithstanding the terms of a waiver, the arbitration will take place in the
state of Washington in the county where the protesting dealer has his principal
place of business. Section 3 of this act applies to a determination made by
the arbitrator or arbitrators in determining whether good cause exists for
permitting the proposed establishment or relocation of a new motor vehicle
dealer, and the manufacturer has the burden of proof to establish that good
cause exists for permitting the proposed establishment or relocation. After a
hearing has been held, the arbitrator or arbitrators shall render a decision as
expeditiously as possible, but in any event not later than one hundred twenty
days from the date the arbitrator or arbitrators are selected or appointed.
The manufacturer shall not establish or relocate the new motor vehicle dealer
until the arbitration hearing has been held and the arbitrator or arbitrators
have determined that there is good cause for permitting the proposed
establishment or relocation. The written decision of the arbitrator is binding
upon the parties unless modified, corrected, or vacated under the Washington
Arbitration Act. Any party may appeal the decision of the arbitrator under the
Washington Arbitration Act, chapter 7.04 RCW.
(5) If the franchise
agreement or the manufacturer's written statement distributed and provided to
its dealers does not provide for arbitration under the Washington Arbitration
Act as a mechanism for resolving disputes relating to the establishment of an
additional new motor vehicle dealer or the relocation of a new motor vehicle
dealer, then the hearing provisions of this section and section 4 of this act
apply. Nothing in this section is intended to preclude a new motor vehicle
dealer from electing to use any other dispute resolution mechanism offered by a
manufacturer.
NEW SECTION. Sec.
3. In determining whether
good cause exists for permitting the proposed establishment or relocation of a
new motor vehicle dealer of the same line make, the administrative law judge
shall take into consideration the existing circumstances, including, but not
limited to:
(1) The extent, nature,
and permanency of the investment of both the existing motor vehicle dealers of
the same line make in the relevant market area and the proposed additional or
relocating new motor vehicle dealer, including obligations reasonably incurred
by the existing dealers to perform their obligations under their respective
franchises;
(2) The growth or
decline in population and new motor vehicle registrations during the past five
years in the relevant market area;
(3) The effect on the
consuming public in the relevant market area;
(4) The effect on the
existing new motor vehicle dealers in the relevant market area, including any
adverse financial impact;
(5) The reasonably
expected or anticipated vehicle market for the relevant market area, including
demographic factors such as age of population, income, education, size class
preference, product popularity, retail lease transactions, or other factors
affecting sales to consumers in the relevant market area;
(6) Whether it is
injurious or beneficial to the public welfare for an additional new motor
vehicle dealer to be established;
(7) Whether the new
motor vehicle dealers of the same line make in the relevant market area are
providing adequate competition and convenient customer care for the motor
vehicles of the same line make in the relevant market area, including the
adequacy of motor vehicle sales and service facilities, equipment, supply of
vehicle parts, and qualified service personnel;
(8) Whether the
establishment of an additional new motor vehicle dealer would increase
competition and be in the public interest;
(9) Whether the
manufacturer is motivated principally by good faith to establish an additional
or new motor vehicle dealer and not by noneconomic considerations;
(10) Whether the
manufacturer has denied its existing new motor vehicle dealers of the same line
make the opportunity for reasonable growth, market expansion, establishment of
a subagency, or relocation;
(11) Whether the
protesting dealer or dealers are in substantial compliance with their dealer
agreements or franchises; and
(12) Whether the
manufacturer has complied with the requirements of sections 1 and 2 of this
act.
In considering the
factors set forth in this section, the administrative law judge shall give the
factors equal weight, and in making a determination as to whether good cause
exists for permitting the proposed establishment or relocation of a new motor
vehicle dealer of the same line make, the administrative law judge must find
that at least nine of the factors set forth in this section weigh in favor of
the manufacturer and in favor of the proposed establishment or relocation of a
new motor vehicle dealer.
NEW SECTION. Sec.
4. (1) The manufacturer has
the burden of proof to establish that good cause exists for permitting the
proposed establishment or relocation.
(2) The administrative
law judge shall conduct any hearing as provided in RCW 46.96.050(2), and all
hearing costs shall be borne as provided in that subsection. The
administrative law judge shall render the final decision as expeditiously as
possible, but in any event not later than one hundred twenty days after a
protest is filed. If more than one protest is filed, the one hundred twenty
days commences to run from the date the last protest is filed. A party to such
a hearing aggrieved by the final order of the administrative law judge may
appeal as provided and allowed in RCW 46.96.050(3).
NEW SECTION. Sec.
5. Sections 1 through 4 of
this act do not apply:
(1) To the sale or
transfer of the ownership or assets of an existing new motor vehicle dealer
where the transferee proposes to engage in business representing the same line
make at the same location or within two miles of that location;
(2) To the relocation
of an existing new motor vehicle dealer within the dealer's relevant market
area, if the relocation is not at a site within eight miles of any new motor
vehicle dealer of the same line make;
(3) If the proposed new
motor vehicle dealer is to be established at or within two miles of a location
at which a former new motor vehicle dealer of the same line make had ceased
operating within the previous twenty-four months;
(4) Where the proposed
relocation is two miles or less from the existing location of the relocating
new motor vehicle dealer; or
(5) Where the proposed
relocation is to be further away from all other existing new motor vehicle
dealers of the same line make in the relevant market area.
NEW SECTION. Sec.
6. A manufacturer shall not
coerce, threaten, intimidate, or require a new motor vehicle dealer, as a
condition to granting or renewing a franchise, to waive, limit, or disclaim a
right that the dealer may have to protest the establishment or relocation of
another motor vehicle dealer in the relevant market area as provided in section
2 of this act.
Sec. 7. RCW 46.96.120 and 1989 c
415 s 18 are each amended to read as follows:
(1) Notwithstanding the
terms of a franchise, a manufacturer shall not unreasonably withhold consent to
the sale, transfer, or exchange of a franchise to a qualified buyer who meets
the normal, reasonable, and uniformly applied standards established by the
manufacturer for the appointment of a new dealer or is capable of being
licensed as a new motor vehicle dealer in the state of Washington. A decision
or determination made by the administrative law judge as to whether a qualified
buyer is capable of being licensed as a new motor vehicle dealer in the state
of Washington is not conclusive or determinative of any ultimate determination
made by the department of licensing as to the buyer's qualification for a motor
vehicle dealer license. A manufacturer's failure to respond in writing to a
request for consent under this subsection within sixty days after receipt of a
written request on the forms, if any, generally used by the manufacturer
containing the information and reasonable promises required by a manufacturer
is deemed to be consent to the request. A manufacturer may request, and, if so
requested, the applicant for a franchise (a) shall promptly provide such
personal and financial information as is reasonably necessary to determine
whether the sale, transfer, or exchange should be approved, and (b) shall agree
to be bound by all reasonable terms and conditions of the franchise.
(2) If a manufacturer
refuses to approve the sale, transfer, or exchange of a franchise, the
manufacturer shall serve written notice on the applicant, the transferring,
selling, or exchanging new motor vehicle dealer, and the department of its
refusal to approve the transfer of the franchise no later than sixty days after
the date the manufacturer receives the written request from the new motor
vehicle dealer. If the manufacturer has requested personal or financial
information from the applicant under subsection (1) of this section, the notice
shall be served not later than sixty days after the receipt of all of such
documents. Service of all notices under this section shall be made by personal
service or by certified mail, return receipt requested.
(3) The notice in
subsection (2) of this section shall state the specific grounds for the refusal
to approve the sale, transfer, or exchange of the franchise.
(4) Within twenty days
after receipt of the notice of refusal to approve the sale, transfer, or
exchange of the franchise by the transferring new motor vehicle dealer, the new
motor vehicle dealer may file a petition with the department to protest the
refusal to approve the sale, transfer, or exchange. The petition shall contain
a short statement setting forth the reasons for the dealer's protest. Upon the
filing of a protest and the receipt of the filing fee, the department shall
promptly notify the manufacturer that a timely protest has been filed, and the
department shall arrange for a hearing with an administrative law judge as the
presiding officer to determine if the manufacturer unreasonably withheld
consent to the sale, transfer, or exchange of the franchise.
(5) In determining
whether the manufacturer unreasonably withheld its approval to the sale,
transfer, or exchange, the manufacturer has the burden of proof that it acted
reasonably. A manufacturer's refusal to accept or approve a proposed buyer who
otherwise meets the normal, reasonable, and uniformly applied standards
established by the manufacturer for the appointment of a new dealer, or who
otherwise is capable of being licensed as a new motor vehicle dealer in the
state of Washington, is presumed to be unreasonable.
(6) The administrative
law judge shall conduct a hearing and render a final decision as expeditiously
as possible, but in any event not later than one hundred twenty days after a
protest is filed. Only the selling, transferring, or exchanging new motor
vehicle dealer and the manufacturer may be parties to the hearing.
(7) The administrative
law judge shall conduct any hearing as provided in RCW 46.96.050(2), and all
hearing costs shall be borne as provided in that subsection. Only the
manufacturer and the selling, transferring, or exchanging new motor vehicle
dealer may appeal the final order of the administrative law judge as provided
in RCW 46.96.050(3).
(8) This section and
RCW 46.96.030 through 46.96.110 apply to all franchises and contracts existing
on July 23, 1989, between manufacturers and new motor vehicle dealers as well
as to all future franchises and contracts between manufacturers and new motor vehicle
dealers.
(9) Sections 1
through 6 of this act apply to all franchises and contracts existing on October
1, 1994, between manufacturers and new motor vehicle dealers as well as to all
future franchises and contracts between manufacturers and new motor vehicle
dealers.
Sec. 8. RCW 46.96.130 and 1989 c
415 s 19 are each amended to read as follows:
The department shall
determine and establish the amount of the filing fee required in RCW 46.96.040,
46.96.110, section 2 of this act, and 46.96.120 (as recodified by
section 9 of this act). The fees shall be set in accordance with RCW
43.24.086.
The department may also
require the petitioning or protesting party to give security, in such sum as
the department deems proper but not in any event to exceed one thousand
dollars, for the payment of such costs as may be incurred in conducting the
hearing as required under this chapter. The security may be given in the form
of a bond or stipulation or other undertaking with one or more sureties.
At the conclusion of
the hearing, the department shall assess, in equal shares, each of the parties
to the hearing for the cost of conducting the hearing. Upon receipt of payment
of the costs, the department shall refund and return to the petitioning party
such excess funds, if any, initially posted by the party as security for the
hearing costs. If the petitioning party provided security in the form of a
bond or other undertaking with one or more sureties, the bond or other
undertaking shall then be exonerated and the surety or sureties under it
discharged.
NEW
SECTION. Sec. 9. Sections 1 through 6 of
this act are each added to chapter 46.96 RCW. RCW 46.96.120 and 46.96.130, as
amended by this act, are recodified to follow sections 1 through 6 of this act
within that chapter.
