SENATE BILL REPORT
SB 5595
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
As of February 23, 2009
Title: An act relating to the termination, cancellation, or nonrenewal of franchises between new motor vehicle dealers and manufacturers.
Brief Description: Addressing the termination, cancellation, or nonrenewal of franchises between new motor vehicle dealers and manufacturers.
Sponsors: Senators Keiser, King, Marr, Honeyford and Kohl-Welles.
Brief History:
Committee Activity: Labor, Commerce & Consumer Protection: 2/05/09.
SENATE COMMITTEE ON LABOR, COMMERCE & CONSUMER PROTECTION |
Staff: Alison Mendiola (786-7483)
Background: Upon the termination, cancellation, or nonrenewal of a franchise by a manufacturer, the manufacturer is to pay a number of costs associated with the dealer including:
dealer cost of new unsold vehicles in the dealer's inventory, acquired from the manufacturer, or another new dealers of the same line make, within the previous 12 months;
dealer costs of unsold supplies, parts, and accessories;
dealers costs of all unsold inventory, including vehicles, parts, or accessories, if the purchase was required by the manufacturer;
the fair market value of signs, if recommended by the manufacturer;
the fair market value of all equipment, furnishings, and special tools acquired from the manufacturer; and
the cost of transporting, handling, and packing all such goods.
If a franchise agreement provide for payment to the dealer in excess of what is provided for in statute, the provisions of the franchise agreement control.
The manufacturer is to pay any money owed to the dealer within 90 days after the tender of the property, if the dealer has clear title to the property and is in a position to convey the title to the manufacturer.
Summary of Bill: The costs that manufacturers are to pay to dealers is broadened to include the termination, cancellation, or nonrenewal of a franchise by either party to the agreement.
The manufacturer is to pay any money owed to the dealer within 90 days after the termination, cancellation, or nonrenewal of the franchise, if the dealer has clear title to the property or can provide clear title to the property upon payment by the manufacturer.
Appropriation: None.
Fiscal Note: Not requested.
Committee/Commission/Task Force Created: No.
Effective Date: The bill contains an emergency clause and takes effect immediately.
Staff Summary of Public Testimony: PRO: Manufacturers are getting assistance from the federal government but dealers aren't and they are hurting too. Dealers are required to buy from the manufacturer and currently if the dealer terminates the contract, the dealer sells off the inventory at a loss. Dealers provide local family wage jobs and dealers need a safety net.
CON: Manufacturers would like to propose to amendments that address other dealers dumping inventory on the closing dealer. Also, if the dealership is going to continue to operate under a new dealership the manufacturer shouldn't be required to buy back the inventory.
Persons Testifying: PRO: Scott Hazelgrove, Washington State Dealers Association; Tom Lane, Dawyne Lane's Family of Auto Centers; Sara Carter, Carter Motors.
CON: Sandi Swarthout, Alliance of Auto Manufacturers.