H-0100.4 _______________________________________________
HOUSE BILL 1182
_______________________________________________
State of Washington 57th Legislature 2001 Regular Session
By Representatives G. Chandler, Clements, Conway, Schoesler, Grant, McMorris, B. Chandler, Hunt, Wood, Lisk and Linville
Read first time 01/19/2001. Referred to Committee on Commerce & Labor.
AN ACT Relating to equipment dealers; amending RCW 19.98.010, 19.98.020, 19.98.030, 19.98.040, 19.98.100, 19.98.120, and 19.98.130; adding new sections to chapter 19.98 RCW; repealing RCW 19.98.110; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1. A new section is added to chapter 19.98 RCW to read as follows:
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Audit" means a review by a supplier of a dealer's warranty claims records.
(2) "Current net price" means the price charged to a dealer for repair parts as listed in the printed price list or catalog of the supplier in effect at the time a warranty claim is made and superseded parts listed in current price lists or catalogs when parts had previously been purchased from the supplier and held by the dealer on the date of the cancellation or discontinuance of a dealer agreement or thereafter received by the dealer from the supplier.
(3) "Dealer" or "equipment dealer" means a person who sells or attempts to sell equipment and who is in the business of the retail sale of equipment. This term does not include suppliers.
(4) "Dealer agreement" means an oral or written contract or agreement for a definite or indefinite period of time in which a supplier of equipment grants to an equipment dealer permission to use a trade name, service mark, or related characteristic, and where there is a community of interest in the marketing of equipment or services related to the equipment at wholesale, retail, leasing, or otherwise.
(5) "Dealership" means the retail sale business engaged in by a dealer under a dealer agreement.
(6) "Distributor" means a person who sells or distributes new equipment to equipment dealers or who maintains distributor representatives within the state.
(7) "Distributor branch" means a branch office, maintained by a distributor, that sells or distributes new equipment to equipment dealers. "Distributor branch" includes representatives of the branch office.
(8)(a) "Equipment" includes:
(i) All-terrain vehicles. All-terrain vehicles, or "ATVs," include three and four-wheeled motorized vehicles, generally characterized by large, low-pressure tires, a seat designed to be straddled by the operator, and handlebars for steering. ATVs are intended for off-road use by an individual operator.
(ii) Farm equipment. Farm equipment includes but is not limited to tractors, trailers, combines, tillage implements, bailers, and other equipment, including attachments and repair parts that are used in the planting, cultivating, irrigation, harvesting, and marketing of agricultural, horticultural, or livestock products.
(iii) Industrial maintenance and construction power equipment. Industrial maintenance and construction power equipment means equipment used for industrial, maintenance, or construction applications, but does not include farm equipment or outdoor power equipment.
(iv) Outdoor power equipment. Outdoor power equipment means equipment, powered by two-cycle or four-cycle gas or diesel engines, or electric motors, which is used to maintain commercial, public, or residential lawns and gardens or used in landscape, turf, golf course, plant nursery, forestry, or tree maintenance.
(b) "Equipment" does not include: (i) Motor vehicles designed or intended for use upon public roadways; or (ii) motorcycles.
(9) "Factory branch" means a branch office maintained by a manufacturer that makes or assembles equipment for sale to distributors or equipment dealers or that is maintained for directing and supervising the representatives of the manufacturer.
(10) "Factory representative" means a person employed by a manufacturer or by a factory branch for the purpose of selling or promoting the sale of equipment or for supervising, servicing, instructing, or contracting with equipment dealers or prospective equipment dealers.
(11) "Geographic market area" means the geographic region for which a particular dealer is responsible for the marketing, selling, leasing, or servicing of equipment pursuant to a dealer agreement.
(12) "Good cause" means failure by a dealer to substantially comply with essential and reasonable requirements imposed upon the equipment dealer by the dealer agreement, provided such requirements are not different from those requirements imposed on other similarly situated equipment dealers in the state either by their terms or in the manner of their enforcement.
(13) "Manufacturer" means a person engaged in the business of manufacturing or assembling new and unused equipment.
(14) "Person" includes a natural person, corporation, partnership, trust, or other entity, including any other entity in which it has a majority interest or of which it has control, as well as the individual officers, directors, or other persons in active control of the activities of each entity.
(15) "Supplier" means a person or other entity engaged in the manufacturing, assembly, or wholesale distribution of equipment or the attachments or repair parts of the equipment. "Supplier" includes any successor in interest, including a purchaser of assets, stock, or a surviving corporation resulting from a merger, liquidation, or reorganization of the original supplier, or any receiver or any trustee of the original supplier.
(16) "Warranty claim" means a claim for payment submitted by an equipment dealer to a supplier for either service, or parts, or both, provided to a customer under a warranty issued by the supplier.
(17) "Wholesaler" means a person who sells or attempts to sell new equipment exclusively to equipment dealers or to other wholesalers.
Sec. 2. RCW 19.98.010 and 1975 1st ex.s. c 277 s 1 are each amended to read as follows:
Whenever any person,
firm, or corporation engaged in the ((retail)) sale of ((farm
implements and)) equipment, repair parts, or services
therefor enters into a written or oral contract with ((any
wholesaler, manufacturer, or distributor)) a supplier of ((farm
implements, machinery)) equipment, attachments, accessories, or
repair parts whereby ((such retailer)) the dealer agrees to
maintain a stock of parts or complete or whole machines, attachments, or
accessories, and either party to such contract desires to cancel or discontinue
the contract, unless the ((retailer)) dealer should desire to
keep such merchandise the ((manufacturer, wholesaler, or distributor)) supplier
shall pay the ((retailer)) dealer for the merchandise. Such
payment shall be in the amount of one hundred percent of the net cost of all
current unused complete ((farm implements, machinery)) equipment,
attachments, and accessories((, including transportation charges paid by the
retailer, and eighty-five)) that are current models and that have been
purchased by the dealer from the supplier within the thirty-six months
immediately preceding notification by either party of intent to cancel or
discontinue the dealer agreement, including the transportation charges to the
dealer and from the dealer to the supplier, if the charges have been paid by
the dealer or invoiced to the dealer's account by the supplier, and one hundred
percent of the current net prices on repair parts, including superseded parts
listed in current price lists or catalogs which parts had previously been
purchased from ((such wholesaler, manufacturer, or distributor)) the
supplier and held by ((such retailer)) the dealer on the date
of the cancellation or discontinuance of such contract or thereafter received
by ((such retailer)) the dealer from the ((wholesaler,
manufacturer, or distributor)) supplier. The ((wholesaler,
manufacturer, or distributor)) supplier shall also pay ((such
retailer)) the dealer a sum equal to five percent of the current net
price of all parts returned for the handling, packing, and loading of such
parts for return((: PROVIDED, That)), unless the supplier elects to
catalog or list the inventory and perform packing and loading of the parts
itself. However, the provisions of this section shall apply only to repair
parts which are new, unused, and in good condition, including repair parts
such as rubber items, gaskets, batteries, oils, lubricants, parts from opened
packages, and single repair parts priced as a set of two or more items.
Upon the payment of such amounts, the title to ((such farm implements, farm
machinery)) the equipment, attachments, accessories, or repair parts((,))
shall pass to the ((manufacturer, wholesaler, or distributor)) supplier
making such payment, and ((such manufacturer, wholesaler, or distributor
shall be)) the supplier is entitled to the possession of such
merchandise.
All payments or allowances of credit due dealers under this section shall be paid or credited by the supplier within ninety days after the return of the equipment, attachments, or repair parts. After the ninety days, all sums of credits due include interest at the rate of eighteen percent per year.
The provisions of this
section shall apply to any annual part return adjustment agreement made between
a ((seller or retailer)) dealer and a ((manufacturer,
wholesaler, or distributor)) supplier.
A supplier must repurchase at amortized value any specific data processing hardware, software, or telecommunications equipment that the supplier required the dealer to purchase within the past five years. The supplier shall also repurchase at seventy-five percent of the net cost specialized repair tools purchased in the previous six years as required by the supplier and held by the dealer on the date of termination. Tools must be unique to the supplier's product line and must be in complete and resalable condition.
The provisions of this
section shall be supplemental to any agreement between the ((retailer)) dealer
and the ((manufacturer, wholesaler, or distributor)) supplier
covering the return of ((farm implements, machinery)) equipment,
attachments, accessories, and repair parts so that the ((retailer)) dealer
can elect to pursue either his or her contract remedy or the remedy
provided herein, and an election by the ((retailer)) dealer to
pursue his or her contract remedy shall not bar his or her right
to the remedy provided herein as to ((those farm implements, machinery))
equipment, attachments, accessories, and repair parts not affected by
the contract remedy.
The provisions of this
section shall apply to all contracts now in effect which have no expiration
date and are a continuing contract, and all other contracts entered into or
renewed after January 1, 1976. Any contract in force and effect on January 1,
1976, which by its own terms will terminate on a date subsequent thereto shall
be governed by the law as it existed prior to this chapter: PROVIDED, That no
contract covered by this chapter may be canceled by any party without good
cause. For the purposes of this section, good cause shall include, but
shall not be restricted to, the failure of any party to comply with the lawful
provisions of the contract, the adjudication of any party to a contract as a
bankrupt, wrongful refusal of ((manufacturer, wholesaler, or distributor))
the supplier to supply ((farm machinery, farm implements)) equipment
and repair parts therefor.
Sec. 3. RCW 19.98.020 and 2000 c 171 s 66 are each amended to read as follows:
All repurchase payments
to ((retailers and sellers)) dealers made pursuant to RCW
19.98.010 shall be less amounts owed on any lien or claim then outstanding upon
such items covered by this section. Any ((wholesaler, manufacturer, or
distributor)) supplier making repurchase payments covered by this
chapter to any ((retailer or seller)) dealer shall satisfy such
secured liens or claims pursuant to Article ((62A.9)) 62A.9A RCW
less any interest owed to the lienholder arising from the financing of such
items which shall be paid to any such secured lienholder by the ((retailer
or seller)) dealer. In no case shall the ((wholesaler,
manufacturer, or distributor)) supplier, in making payments covered
by RCW 19.98.010, pay in excess of those amounts prescribed therein.
Sec. 4. RCW 19.98.030 and 1975 1st ex.s. c 277 s 3 are each amended to read as follows:
The prices of ((farm
implements, machinery)) equipment and repair parts therefor,
required to be paid to any ((retail)) dealer as provided in RCW
19.98.010 shall be determined by taking one hundred percent of the net cost on
((farm implements, machinery,)) equipment and attachments, and ((eighty-five))
one hundred percent of the current net price of repair parts therefor as
shown upon the ((manufacturer's, wholesaler's, or distributor's)) supplier's
price lists or catalogues in effect at the time such contract is canceled or
discontinued.
Sec. 5. RCW 19.98.040 and 1975 1st ex.s. c 277 s 4 are each amended to read as follows:
In the event that any
((manufacturer, wholesaler, or distributor of farm machinery, farm
implements,)) supplier of equipment and repair parts ((therefor)),
upon cancellation or discontinuation of a contract by either a ((retailer))
dealer or ((a manufacturer, wholesaler, or distributor)) supplier,
fails or refuses to make payment to such dealer as is required by RCW 19.98.010,
((such manufacturer, wholesaler, or distributor shall be)) the
supplier is liable in a civil action to be brought by ((such retailer))
the dealer for such payments as are required by RCW 19.98.010.
Sec. 6. RCW 19.98.100 and 1990 c 124 s 1 are each amended to read as follows:
The legislature of this
state finds that the retail distribution and sales of ((agricultural))
equipment, utilizing independent ((retail business)) dealers
operating under agreements with ((the manufacturers and distributors)) suppliers,
vitally affects the general economy of the state, public interests, and public
welfare and that it is necessary to regulate the business relations between the
((independent)) dealers and the ((equipment manufacturers, wholesalers,
and distributors)) suppliers.
Sec. 7. RCW 19.98.120 and 1990 c 124 s 3 are each amended to read as follows:
(1) It shall be a violation of this chapter for a supplier to:
(((1))) (a)
Require or attempt to require any equipment dealer to order or accept delivery
of any equipment or parts or any equipment with special features or accessories
not included in the base list price of such equipment as publicly advertised by
the supplier which the equipment dealer has not voluntarily ordered;
(((2))) (b)
Require or attempt to require any equipment dealer to enter into any agreement,
whether written or oral, supplementary to an existing dealer agreement with the
supplier, unless such supplementary agreement is imposed on other similarly
situated dealers in the state;
(((3))) (c)
Refuse to deliver in reasonable quantities and within a reasonable time after
receipt of the equipment dealer's order, to any equipment dealer having a
dealer agreement for the retail sale of new equipment sold or distributed by
the supplier, equipment covered by the dealer agreement specifically advertised
or represented by the supplier to be available for immediate delivery.
However, the failure to deliver any such equipment shall not be considered a
violation of this chapter when deliveries are based on prior ordering
histories, the priority given to the sequence in which the orders are received,
or manufacturing schedules or if the failure is due to prudent and reasonable
restriction on extension of credit by the supplier to the equipment dealer, an
act of God, work stoppage or delay due to a strike or labor difficulty, a bona
fide shortage of materials, freight embargo, or other cause over which the
supplier has no control;
(((4))) (d)
Terminate, cancel, or fail to renew the dealer agreement of any equipment
dealer or substantially change the equipment dealer's competitive
circumstances, attempt to terminate or cancel, or threaten to not renew the
dealer agreement or to substantially change the competitive circumstances
without good cause;
(((5))) (e)
Condition the renewal, continuation, or extension of a dealer agreement on the
equipment dealer's substantial renovation of the equipment dealer's place of
business or on the construction, purchase, acquisition, or rental of a new
place of business by the equipment dealer unless: The supplier has advised the
equipment dealer in writing of its demand for such renovation, construction,
purchase, acquisition, or rental within a reasonable time prior to the
effective date of the proposed date of renewal or extensions, but in no case
less than one year; the supplier demonstrates the need for such change in the
place of business and the reasonableness of the demand with respect to
marketing and servicing the supplier's product and any economic conditions
existing at the time in the dealer's trade area; and the equipment dealer does
not make a good faith effort to complete the construction or renovation plans
within one year;
(((6))) (f)
Discriminate in the prices charged for equipment of like grade and quality sold
by the supplier to similarly situated dealers in this state. This subsection
does not prevent the use of differentials which make only due allowance for
differences in the cost of manufacture, sale, or delivery resulting from the
differing methods or quantities in which such commodities are sold or
delivered: PROVIDED, That nothing shall prevent a seller from offering a lower
price in order to meet an equally low price of a competitor, or the services or
facilities furnished by a competitor;
(((7) Unreasonably
withhold consent for an equipment dealer to change the capital structure of the
equipment dealership or the means by which it is financed: PROVIDED, That the
equipment dealer meets the reasonable capital requirements of the manufacturer;
(8))) (g) Discriminate against or penalize a
dealer for carrying on business as a dealer or agent for another supplier, or
selling or servicing the product of another supplier from the same location and
building;
(h) Prevent, attempt to prevent, or unreasonably disapprove any equipment dealer from changing executive management control, capital structure, or means by which it is financed, unless the change results in control by a person not of good moral character or who does not meet the supplier's existing and reasonable, written, and uniformly applied capital standards. The dealer must be given written notice of the reasons for the rejection of the proposed change of executive management control, capital structure, or means by which it is financed within thirty days of receipt of notice from the dealer of a proposed change;
(i)(i) Prevent,
by contract or otherwise, any equipment dealer or any officer, member, partner,
or stockholder of any equipment dealer from selling or transferring any part of
the interest in the equipment dealership of any of them to any other person or
persons or party or parties. However, no equipment dealer, officer, partner,
member, or stockholder shall have the right to sell, transfer, or assign the
equipment dealership or power of management or control thereunder without the
written consent of the supplier. ((Such consent shall not be unreasonably
withheld if the person or persons or party or parties meets the reasonable
financial, business experience, and character standards of the supplier))
(ii) The supplier's consent may only be withheld if the buyer or transferee is not of good moral character, does not meet the supplier's existing and reasonable, written, and uniformly applied capital standards, or does not meet the supplier's written and uniformly applied business experience standards. The dealer must 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. The burden of proof is on the supplier to show that its consent to the sale, transfer, or assignment of any interest in the dealership was properly withheld. Material factors to be considered may include but are not limited to whether the basic financial and facility requirements of the dealership agreement will be met by the proposed sale, transfer, or assignment and whether the proposed transferee is capable of operating, managing, and supervising such a business;
(j) Cause the equipment dealer to refrain from participation in the management, investment, acquisition, or sale of any other related product or product line of equipment, parts, or accessories;
(k) Enter into an agreement by which the supplier, factory branch, factory representative, distributor, distributor branch, or distributor representative can directly solicit the dealer's customers;
(((9))) (l)
Require an equipment dealer to assent to a release, assignment, novation,
waiver, or estoppel that would relieve any person from liability imposed by
this chapter; or
(((10)(a))) (m)(i)
Unreasonably withhold consent, in the event of the death of the equipment
dealer or the principal owner of the equipment dealership, to the transfer of
the equipment dealer's interest in the equipment dealership to a member or
members of the family of the equipment dealer, the principal owner of the
equipment dealership, or to another qualified individual if the family member
or other qualified individual meets the reasonable financial, business
experience, and character standards required by the supplier. Should a
supplier determine that the designated family member or other qualified
individual does not meet those reasonable written standards, it shall
provide the equipment dealer with written notice of its objection and specific
reasons for withholding its consent. A supplier shall have sixty days to
consider an equipment dealer's request to make a transfer to a family member or
other qualified individual. If the family member or other qualified individual
reasonably satisfies the supplier's objections within sixty days, the supplier
shall approve the transfer. As used in this section, "family"
includes a spouse, parents, siblings, children, stepchildren, sons-in-law,
daughters-in-law, and lineal descendants, including those by adoption, of the
equipment dealer or principal owner of the equipment dealership. Nothing in
this section shall entitle a family member or other qualified individual of a
deceased dealer or principal owner of the equipment dealership to continue to
operate the dealership without the consent of the supplier.
(((b))) (ii)
If a supplier and equipment dealer have duly executed an agreement concerning
succession rights prior to the equipment dealer's death and the agreement has
not been revoked, the agreement shall be observed even if it designates someone
other than the surviving spouse or heirs of the decedent as the successor.
(2) In the event that a supplier fails to give notice, obtain consent, or fails or refuses to comply with the provisions of this section, the guaranty or security agreement thereby affected is deemed canceled and terminated.
(3) A supplier must give a dealer a minimum of sixty days' notice in writing and obtain consent from the dealer before: (a) Changing the time and manner of payment of any indebtedness owed by a dealer to a supplier; (b) taking and making any changes in notes or security for any indebtedness; (c) releasing or adding additional guarantors; or (d) granting renewals or extensions of the indebtedness.
(4) No person signing a security agreement or guaranty agreement with a supplier is required to pledge or encumber its assets in a value in excess of the amount of the indebtedness secured.
(5) The provisions of this section apply to all contracts now in effect that have no expiration date and are a continuing contract, and all other contracts entered into or renewed after the effective date of this section. Any contract in force and effect on the effective date of this section, which by its own terms will terminate on a date subsequent thereto shall be governed by the law as it existed prior to this act. However, no contract covered by this act may be canceled by any party without good cause. For the purposes of this section, good cause includes, but is not restricted to, the failure of any party to comply with the lawful provisions of the contract, the adjudication of any party to a contract as a bankrupt, wrongful refusal of the supplier to supply equipment and repair parts therefor.
Sec. 8. RCW 19.98.130 and 1990 c 124 s 4 are each amended to read as follows:
(1) Except where a grounds for termination or nonrenewal of a dealer agreement or a substantial change in an equipment dealer's competitive circumstances are contained in subsection (2)(a), (b), (c), (d), (e), or (f) of this section, a supplier shall give an equipment dealer ninety days' written notice of the supplier's intent to terminate, cancel, or not renew a dealer agreement or substantially change the equipment dealer's competitive circumstances. The notice shall state all reasons constituting good cause for termination, cancellation, or nonrenewal and shall provide, except for termination pursuant to subsection (2)(a), (b), (c), (d), or (e) of this section, that the equipment dealer has sixty days in which to cure any claimed deficiency. If the deficiency is rectified within sixty days, the notice shall be void. The contractual terms of the dealer agreement shall not expire or the equipment dealer's competitive circumstances shall not be substantially changed without the written consent of the equipment dealer prior to the expiration of at least ninety days following such notice.
(2) As used in RCW 19.98.100 through 19.98.150 and 19.98.911, a termination by a supplier of a dealer agreement shall be with good cause when the equipment dealer:
(a) Has transferred a
controlling ownership interest in the equipment dealership ((without the
supplier's consent)) to a person not of good moral character or to a
person who does not meet the supplier's existing and reasonable, written, and
uniformly applied capital standards;
(b) Has made a material misrepresentation to the supplier;
(c) Has filed a voluntary petition in bankruptcy or has had an involuntary petition in bankruptcy filed against the equipment dealer which has not been discharged within sixty days after the filing, is in default under the provisions of a security agreement in effect with the supplier, or is insolvent or in receivership;
(d) Has been convicted of a crime, punishable for a term of imprisonment for one year or more;
(e) Has failed to operate in the normal course of business for ten consecutive business days or has terminated the business;
(f) Has relocated the equipment dealer's place of business without supplier's consent;
(g) Has consistently engaged in business practices that are detrimental to the consumer or supplier by way of excessive pricing, misleading advertising, or failure to provide service and replacement parts or perform warranty obligations;
(h) ((Has
inadequately represented the supplier over a measured period causing lack of
performance in sales, service, or warranty areas and failed to achieve market
penetration at levels consistent with similarly situated equipment dealerships
in the state based on available record information;
(i))) Has consistently failed to meet building and
housekeeping requirements or failed to provide adequate sales, service, or
parts personnel commensurate with the dealer agreement;
(((j))) (i)
Has consistently failed to comply with the applicable licensing laws pertaining
to the products and services being represented for and on supplier's behalf; or
(((k))) (j)
Has consistently failed to comply with the terms of the dealer agreement.
(3) Notwithstanding the provisions of subsection (2)(a) through (g) of this section, before the termination or nonrenewal of a dealer agreement based upon a supplier's claim that the dealer has failed to meet reasonable marketing criteria or market penetration, the supplier shall provide written notice of its intention at least one year in advance.
(a) After issuance of such a notice, the supplier shall provide fair and reasonable efforts to work with the dealer to assist the dealer in gaining the required market share including, but not limited to, making available to the dealer an adequate inventory of new equipment and parts and competitive marketing programs.
(b) Upon the end of the one‑year period established in this subsection (3), the supplier may terminate or elect not to renew the dealer agreement only upon written notice specifying the reasons for determining that the dealer failed to meet reasonable marketing criteria or market penetration. The notice must specify that termination or nonrenewal is effective one hundred eighty days from the date of the notice.
NEW SECTION. Sec. 9. A new section is added to chapter 19.98 RCW to read as follows:
(1) A supplier that intends to establish a new dealer or dealership or that intends to relocate a current dealer or dealership for a particular product line or make of equipment within the geographic market area of an existing dealer of the same product line or make of equipment must give written notice of such an intention by certified mail to all existing dealers within the geographic market area. The supplier must provide in its written notice the following information about the proposed new or relocated dealer or dealership:
(a) The specific proposed location;
(b) The proposed date for commencement of operation at the new location;
(c) The identities of all existing dealers or dealerships located in the affected geographic market area; and
(d) The name and address of the proposed new or relocating dealer or dealers.
(2) Any existing dealer located in the geographic market area in which a supplier intends to establish a new dealership or relocate a current dealership may petition a court of competent jurisdiction, within sixty days of the receipt of the supplier's notice as required by subsection (1) of this section, to enjoin or prohibit the establishment of the new or relocating dealer or dealership within the geographic market area of the petitioning dealer. The court may enjoin or prohibit the establishment of the new dealer or dealership or relocation of a current dealer or dealership within the geographic market area of the petitioning dealer if the petitioning dealer proves by a preponderance of the evidence that he or she is providing adequate representation of the product line or make of equipment in his or her geographic market area. In determining if the existing dealer is providing adequate representation and whether the new or relocated dealer is justified and necessary, the court may consider, but is not limited to considering, the following factors:
(a) The impact the establishment of the new or relocated dealer or dealership will have on users of the equipment, the public at large, and all existing dealers within the geographic market area;
(b) The size and permanency of investment reasonably made and the reasonable obligations incurred by all existing dealers within the geographic market area to perform obligations under their dealer agreements;
(c) The reasonably expected market penetration of the product line or make of equipment for the geographic market area, after consideration of all factors that may affect the penetration including, but not limited to, demographic factors such as age, income, education, product popularity, retail sales and lease transactions, and other factors affecting marketing of equipment in the geographic market area;
(d) Actions by the supplier in denying its existing dealer or dealers of the same product line or make of equipment the opportunity for reasonable growth, market expansion, or relocation including the availability of equipment in keeping with reasonable expectations of the supplier in providing an adequate number of dealerships in the geographic market area;
(e) Attempts by the supplier to coerce the existing dealer or dealers into consenting to an additional or relocated dealer or dealership of the same product line or make of equipment in the geographic market area;
(f) The distance, travel time, traffic patterns, and accessibility between the location of the existing dealer or dealers and the location of the proposed new or relocated dealer or dealership;
(g) The potential benefits to users of equipment within the geographic market area resulting from the proposed new or relocated dealer or dealership;
(h) Whether the existing dealer or dealers within the geographic market area are in substantial compliance with their dealer agreements;
(i) Whether the proposed establishment of a new dealer or dealership or relocation of a current dealer or dealership appears to be justified and necessary based upon economic and market conditions pertinent to dealers competing in the geographic market area, including any anticipated changes in these conditions; and
(j) The volume of sales and lease transactions, and product service transactions, engaged in by the existing dealer or dealers within the geographic market area of the proposed new or relocating dealer or dealership.
(3) This section does not apply to:
(a) The addition of a new dealership at a location that is within a three‑mile radius of a former dealership of the same product line or make of equipment that has been out of business for less than two years;
(b) The relocation of a current dealer or dealership to a new location that is farther away from any protesting dealer's location than the relocated dealer's previous location;
(c) The relocation of a current dealer or dealership to a new location that is within a three‑mile radius of the dealer's current location, when the dealership has been at the current location at least ten years; or
(d) A supplier of outdoor power equipment whose sales of outdoor power equipment represent less than ten percent of the supplier's gross annual sales in the United States.
NEW SECTION. Sec. 10. A new section is added to chapter 19.98 RCW to read as follows:
(1) In the event a warranty claim is submitted by an equipment dealer to a supplier while a dealer agreement is in effect, or after the termination of a dealer agreement, if the claim is for work performed before the effective date of the dealer agreement termination:
(a) A supplier shall fulfill any warranty agreement with, and fairly compensate as provided in (b) of this subsection, each of its dealers for labor, parts, and transportation of equipment or dealership personnel relative to repairs of equipment covered by the terms of such an agreement.
(b) The provisions of this section do not apply to a manufacturer who provides in a written dealer agreement for compensation to a dealer for warranty labor costs either as a discount in the pricing of the equipment to the dealer, or as a lump sum payment to the dealer, provided such a payment is not less than five percent of the suggested retail price of the equipment.
(i) The supplier must approve or disapprove, in writing, any claim submitted by a dealer for warranty compensation for labor, parts, or transportation of equipment within thirty days of receipt of such a claim by the supplier.
(ii) The supplier must pay to the submitting dealer any approved dealer claim within thirty days following approval of such a claim.
(iii) If a supplier disapproves a dealer warranty claim, the supplier must state the specific reasons for rejecting the claim in its written notification required by (b)(i) of this subsection.
(iv) A claim that is disapproved by the supplier based upon the dealer's failure to properly follow the procedural or technical requirements for submission of warranty claims may be resubmitted in proper form by the dealer within thirty days of receipt by the dealer of the supplier's notification of such a disapproval.
(v) A claim that is not specifically disapproved, in writing, by the supplier within thirty days following the supplier's receipt of such a claim is conclusively deemed to be approved and must be paid to the submitting dealer within thirty days following expiration of the notification period established in (b)(i) of this subsection.
(vi) A supplier may audit warranty claims submitted by its dealers for a period of up to one year following payment of the claims, and may charge back to its dealers any amounts paid based upon claims shown by audit to be false or fraudulent.
(2) A supplier must compensate its dealers for warranty claims pursuant to the following schedule:
(a) Reasonable compensation must be made by the supplier for costs associated with diagnostic work, repair service, parts, labor, and transportation of equipment or dealership personnel that are related to warranted repairs;
(b) Time allowances for diagnosis and performance of warranty work and service must be adequate for the work being performed;
(c) The hourly labor rate for which the dealer is compensated may not be less than the rate charged by the dealer for like services provided to nonwarranty customers for nonwarranted service; and
(d) Compensation for parts used in the performance of a warranted repair may not be less than the amount paid by the dealer to obtain the parts, plus a reasonable allowance for shipping and handling.
(3) It is unlawful for a supplier to disapprove, delay payment for, or restrict a warranty claim submitted by a dealer for compensation for any costs associated with the provision of warranty service unless the disapproval, delay, or restriction is the direct result of a material defect in the claim that affects its validity.
(4) Notwithstanding the provisions of subsections (1) through (3) of this section, a supplier may withhold payment of a warranty claim as setoff against reasonable obligations otherwise owed by the dealer to the supplier.
(5) A supplier must provide for and take all action that is reasonable to ensure the availability of repair parts throughout the reasonable useful product life of any equipment sold in the state.
NEW SECTION. Sec. 11. A new section is added to chapter 19.98 RCW to read as follows:
A supplier may not audit a dealer's records with respect to any warranty claim submitted more than one year prior to the audit.
NEW SECTION. Sec. 12. A new section is added to chapter 19.98 RCW to read as follows:
(1) In the event that the supplier fails to make payment in accordance with the terms of section 10 of this act, or wrongfully rejects a warranty claim, or violates any other provisions of section 10 or 11 of this act, a dealer may bring an action in a court of competent jurisdiction to obtain payment of a warranty claim submitted to a supplier.
(2) In the event that the court finds that the supplier has failed to make payment in accordance with the terms of section 10 of this act, or has wrongfully rejected a warranty claim, or has violated any other provisions of section 10 or 11 of this act, the court shall award the equipment dealer costs and reasonable attorneys' fees.
NEW SECTION. Sec. 13. Sections 10 through 12 of this act take effect October 1, 2001.
NEW SECTION. Sec. 14. RCW 19.98.110 (Definitions) and 2000 c 171 s 67 & 1990 c 124 s 2 are each repealed.
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