WARRANTY RATE LAWS
BY STATE

STATE TO READ THE LAW.

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ALABAMA

ALA CODE §8-20-7.  Effective June 1, 2022 (a) For purposes of this section, the following words have the following meanings:

(1) PRE-DELIVERY SERVICE. All work and services, except warranty work, performed on a new motor vehicles by a motor vehicle dealer at the direction of the warrantor prior to the delivery of the vehicle to the first retail consumer.

(2) REPAIR ORDER. An invoice, paid by a retail customer, and closed as of the time of submission, encompassing one or more repairs to a motor vehicle, and reflecting, in the case of a parts markup submission, the cost of each part and the sale price thereof, and in the case of a labor rate submission, the total charges for labor and the total number of hours that produced the charges, which invoice may be submitted in electronic form.

(3) QUALIFIED REPAIR. A repair to a motor vehicle paid by a retail customer, which would have come within the warrantor’s new motor vehicle warranty, but for the motor vehicle having exceeded the chronological or mileage limit of such warranty, and which does not constitute any of the work encompassed by subsection (f)(5).

(4) QUALIFIED REPAIR ORDER. A repair order which encompasses, in whole or in part, a qualified repair or repairs.

(5) WARRANTOR. A manufacturer, distributor, or wholesaler, factory branch, factory representative, distributor branch, or distributor representative.

(6) WARRANTY WORK. All labor, including that of a diagnostic character, performed, and all parts, including original or replacement parts, and components, including engine, transmission, and other parts assemblies, installed by motor vehicle dealers on motor vehicles which are reasonably incurred by motor vehicle dealers, other than the incidental expenses incurred in performing labor and installing parts on motor vehicles, in fulfilling a warrantor’s obligations under a new motor vehicle warranty, a recall, or a certified pre-owned warranty, to consumers, including, but not limited to, the expense of shipping or returning defective parts to the warrantor, when required by the warrantor.

 (b) Every warrantor shall specify in writing to each of its motor vehicle dealers the dealer’s obligation for pre-delivery service and warranty service on its products, shall compensate the motor vehicle dealer for the service required of the dealer by the warrantor and shall provide the dealer the schedule of compensation to be paid such dealer for parts, work, and service in connection with the services, and the time allowance for the performance of such work and service.

 (c) In no event shall such schedule of compensation fail to include reasonable compensation for diagnostic work, service, labor, and parts. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed.

In no event shall such compensation of a dealer for warranty services including labor and parts, be less than the rates or prices charged by such dealer for like service to retail customers for nonwarranty service, repairs, and parts, provided that such prices and rates are not unreasonable. This subsection does not apply to compensation for parts, systems, fixtures, appliances, furnishings, accessories, and features of a motor home that are designed,used, and maintained primarily for non-vehicular residential purposes, or parts related to motorcycle repairs.

 (d) It is a violation of this section for any warrantor to fail to perform any warranty obligations under the motor vehicle manufacturer’s warranty, or to fail to include in written notices of factory recalls to

dealers the expected date by which necessary parts and equipment will be available to dealers for the correction of such defects, or to fail to compensate any of the motor vehicle dealers for repairs effected by such recall.

 (e) All claims made by new motor vehicle dealers pursuant to this section for such labor and parts shall be paid within 30 days following their approval; provided, however, that the warrantor retains the

right to audit such claims and to charge back the dealer for any fraudulent claims for a period not to exceed 12 months from the date the claim was paid. All such claims shall be either approved or disapproved within 30 days after their receipt on forms and in the manner specified by the warrantor, and any claim not specifically disapproved in writing within 30 days after the receipt shall be  construed to be approved and payment must follow within 30 days. A warrantor shall not disapprove claims for which the dealer has received preauthorization from the warrantor or its representative nor shall the warrantor unreasonably disapprove a claim solely based on the dealer’s incidental failure to comply with a specific claim processing requirement that results only in a clerical error or administrative error; rather a claim denial must be based upon a material defect and deviation from the reasonable written claim submission requirements of the manufacturer. In the event of neglect, oversight, or mistake by the dealer, a dealer may submit an amended claim, or may submit a claim not submitted within the time required by the warrantor, for labor and parts up to 120 days from the date on which such claim was first submitted or could have been submitted.

(f)(1) For the purposes of this section, reasonable compensation shall be determined as provided in this subsection.

(2) The markup customarily charged by the dealer for parts or its labor rate may be established at the election of the dealer by the dealer submitting to the warrantor, either by electronic transmission or tangible delivery, all consecutive repair orders that include 100 sequential repair orders reflecting qualified repairs, or all repair orders closed during any period of 90 consecutive days, whichever produces the fewer number of repair orders, covering repairs made no more than 180 days before the submission and declaring the parts markup or labor rate.

(3) The dealer shall calculate its labor rate by determining the total charges for labor from the qualified repairs submitted and dividing that amount by the total number of hours that produced the charges. The dealer shall calculate its parts markup by determining the total charges for parts from the qualified repairs submitted, dividing that amount by its total cost of the purchase of the parts, subtracting one

from that amount, and multiplying by 100 to produce a percentage.

(4) A motor vehicle dealer seeking to establish or modify its warranty reimbursement labor rate, parts markup, or both, not more frequently than once per 12-month period, shall submit to the warrantor one of the following:

a. A single set of repair orders for purposes of calculating both its labor rate and parts markup.

b. A set of repair orders for purposes of calculating only its labor rate or for purposes of calculating only its parts markup.

 (5) In calculating the rate customarily charged by the dealer for parts and labor for purposes of this subsection, the following shall not be included in the calculation of the rate:

a. Repairs which are the subject of manufacturer or distributor discounts, such as special events, specials, promotions, coupons, or service campaigns.

b. Repairs of motor vehicles owned by the dealer.

c. Routine maintenance, including, but not limited to, replacements of fluids, filters, batteries, bulbs, belts, nuts, bolts, or fasteners, unless provided in the course of, and related to, an otherwise qualified repair.

d. Installations of accessories.

e. Replacements of or work on tires, wheels, including alignments, wheel or tire rotations, or replacements of brake drums, rotors, shoes, or pads.

f. Vehicle reconditioning.

g. Safety or emission inspections required by law.

h. Repairs for which volume discounts have been negotiated with government agencies.

i. Body shop repairs, including repairs covered by insurance, for conditions caused by collision, road hazard, the force of the elements, vandalism, theft, or the negligence or deliberate act of the owner, operator, or a third party.

j. Parts that do not have individual part numbers.

k. Warrantor approved and reimbursed goodwill repairs or reimbursements.

l. Window replacement, window etching, window tint, protective film, or other masking products.

(6) a. The submitted parts markup or labor rate shall go into effect 45 days after the warrantor’s receipt of its submission, unless, within that period, the warrantor reasonably substantiates that the submission is materially incomplete, materially inaccurate, or is materially unreasonable and provides a full explanation of any reasons that the submitted markup or rate is materially incomplete, materially inaccurate, or materially unreasonable, evidence validating each reason, a copy of all calculations used by it demonstrating any material inaccuracy, and a proposed adjusted markup or rate provided that the dealer’s submission is materially accurate based upon the qualified repair orders submitted by the dealer. In that event, the warrantor may submit only one rebuttal to the dealer, and may not thereafter add to, expand, supplement, or otherwise modify any element thereof, including, but not limited to, its grounds for contesting the parts markup or labor rate, unless the warrantor did not possess the information at the time of its rebuttal, or if the information is used for the purpose of rebutting the dealer’s response to the warrantor’s rebuttal.

b. If a warrantor determines from any set of repair orders submitted under this subsection that the labor rate or parts markup calculated under this subsection is substantially higher or lower than the rate currently on record with the warrantor for labor or parts, or both, the warrantor, in accordance with this subsection, may request additional repair orders for a period of 60 days prior to or 60 days subsequent to the time period for which the repair orders were submitted for purposes of an alteration, and shall have 45 days from receiving the additional repair orders to rebut the presumption that the dealer’s proposed markup and labor rates are reasonable.

(7) If the dealer and the warrantor do not agree on the parts markup or labor rate, then the dealer may file an action in a court having jurisdiction in this state within 120 days of receiving the warrantor’s written rejection of the dealer’s proposed parts markup or labor rate. In that action, the warrantor shall have the burden of proving by a preponderance of the evidence that the dealer’s submitted parts markup or labor rate, or both, was materially incomplete, materially inaccurate, or was materially unreasonable. Upon a court decision in favor of the dealer finding that the labor or parts rate shall be more than proposed by the warrantor, any increase in the dealer’s parts markup or labor rate arising from the proceeding shall be effective retroactively to the date 45 days following the warrantor’s receipt of the original submission to the dealer or to the warrantor.

(8) In the determination of what constitutes materially unreasonable compensation under this section, relevant factors include, but are not limited to, the prevailing wage rates paid by similarly situated dealers in the state.”

ALASKA

TITLE 45. TRADE AND COMMERCE § 45.27.150.
(a) A manufacturer shall use the criteria established in this section to reimburse an authorized dealer for all approved warranty service work performed by the authorized dealer.
(b) If the technician performing the warranty service work meets the certification standards in the dealership agreement, a manufacturer shall pay to a servicing authorized dealer warranty work labor rates that
(1) are not less than the highest of the following:
(A) the rate the authorized dealer customarily charges to a customer for nonwarranty service work;
(B) the manufacturer’s printed flat rate;  or
(C) the rate established by a flat rate manual for dealers, if the manual is produced for dealers by a nationally respected industry consultant;  and
(2) include time for clean-up, preparation, diagnosis, disassembly, repair, assembly, testing, and final cleaning as needed to provide a quality result and customer satisfaction.
(c) In addition to the payment under (b) of this section, the manufacturer shall reimburse an authorized dealer a minimum of one hour at the authorized dealer’s shop standard labor rate for the administration of each warranty claim.
(d) A manufacturer shall reimburse the authorized dealer for product parts in the authorized dealer’s inventory at the current manufacturer’s full suggested retail price.

ARKANSAS

23-112-310. Delivery, preparation, and warranty obligations.
(a) (1) Every licensed motor vehicle manufacturer, distributor, second-stage manufacturer, importer, or converter shall file with the Arkansas Motor Vehicle Commission with its initial application for a license: (A) A copy of the documents stating the delivery, preparation, and warranty obligations of its motor vehicle dealers; and (B) A schedule of the compensation to be paid to its motor vehicle dealers for the work and services they shall be required to perform in connection with the delivery, preparation, and warranty obligations.

23-112-310. Delivery, preparation, and warranty obligations. 

(a) (1) Every licensed motor vehicle manufacturer, distributor, second-stage manufacturer, importer, or converter shall file with the Arkansas Motor Vehicle Commission with its initial application for a license: (A) A copy of the documents stating the delivery, preparation, and warranty obligations of its motor vehicle dealers; and (B) A schedule of the compensation to be paid to its motor vehicle dealers for the work and services they shall be required to perform in connection with the delivery, preparation, and warranty obligations. 

(2) The documents shall constitute the dealer’s only responsibility for product liability as between the dealer and the manufacturer or distributor. 

(3) Any revisions to the delivery, preparation, and warranty obligations or to the schedule of compensation shall be filed no later than September 15 of each calendar year. (b) Any mechanical, body, or parts defects arising from any express or implied warranties of any manufacturer shall constitute the manufacturer’s product or warranty liability.

(c) Notwithstanding the terms of a franchise agreement or provision of law in conflict with this subsection, the dealer’s delivery, preparation, and warranty obligations as filed with the commission shall constitute the dealer’s sole responsibility for product liability as between the dealer and the manufacturer or distributor, and, except for a loss caused by the dealer’s negligence or intentional misconduct or a loss caused by the dealer’s modification of a product without manufacturer authorization, the manufacturer or distributor shall reimburse the dealer for all losses incurred by the dealer, including legal fees, court costs, and damages, as a result of the dealer’s having been named a party in a product liability action. 

(d) (1) (A) A manufacturer, distributor, distributor branch or division, or factory or division branch shall not pay to any of its motor vehicle dealers a labor rate per hour or parts price for warranty work that is less than that charged by the dealer to its retail customers, provided the rate is reasonable compared to other same line-make dealers in the dealer’s relevant market area or the dealer’s competitive market area. 

(B) Conversely, a dealer shall not charge to its manufacturer, distributor, distributor branch or division, or factory branch or division a labor rate per hour or parts price in excess of the rate charged to its retail customers. 

(C) In the case of a motor home, a warrantor shall reimburse the dealer for warranty parts at the actual wholesale cost plus a minimum thirty percent (30%) handling charge and the cost, if any, of freight to return the warranty parts to the warrantor. 

(D) A manufacturer, distributor, distributor branch or division, or factory branch or division of new motorcycles, motorized cycles, and all-terrain vehicles shall not pay to any new motor vehicle dealers of motorcycles, motorized cycles, and all- terrain vehicles a labor rate per hour or parts price for warranty work that is less than that charged by the new motor vehicle dealer to its retail customers, provided that the rate is reasonable compared to other same line make motor vehicle dealers in the new motor vehicle dealer’s relevant market area or the new motor vehicle dealer’s competitive market area. 

(2) (A) All claims made by motor vehicle dealers for the labor, parts, or incidental expenses shall be paid within thirty (30) days following their approval. 

(B) All claims shall be either approved or disapproved within thirty (30) days after their receipt, and when any claim is disapproved, the motor vehicle dealer who submits it shall be notified in writing of its disapproval within the period, and each notice shall state the specific grounds upon which the disapproval is based. 

(3) In no event shall any manufacturer, distributor, distributor branch or division, or factory or division branch refuse to pay to any of its motor vehicle dealers for any warranty work, as long as the work in question was properly performed.

 HISTORY: Acts 1975, No. 388, §§ 5, 6; 1985, No. 1032, §§ 3, 5; 1985, No. 1058, §§ 3, 5; A.S.A. 1947, §§ 75- 2305, 75-2306; Acts 1991, No. 411, § 2; 1997, No. 1154, § 11; 1999, No. 1042, § 5; 2001, No. 1053, § 11; 2009, No. 756, § 10; 2011, No. 1005, § 7.

ARIZONA

28-4451. Product liability; warranty obligations; audits; vehicle exports; used vehicle recall obligations; definition

 

A. Each manufacturer shall file with the director a copy of the delivery and preparation obligations required to be performed by a new motor vehicle dealer before delivery of new motor vehicles to buyers. These delivery and preparation obligations constitute the new motor vehicle dealer’s only responsibility for the product liability as between the new motor vehicle dealers and the manufacturer. The new motor vehicle dealer shall furnish the buyer of a new motor vehicle with a signed copy of the manufacturer’s or distributor’s delivery and preparation requirements indicating that all of the requirements have in fact been performed.

B. Any mechanical, body or parts defects arising from any express or implied warranties of the manufacturer constitute the manufacturer’s product or warranty liability.

C. The manufacturer or distributor shall compensate an authorized new motor vehicle dealer who performs work to rectify the manufacturer’s or distributor’s warranty obligations, recall obligations or delivery and preparation obligations.

D. The compensation that the manufacturer or distributor pays to a new motor vehicle dealer for diagnostic work, repair service and labor shall be fair and reasonable and, at the option of the new motor vehicle dealer, may be determined pursuant to subsection E of this section. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work or services to be performed. The compensation that the manufacturer or distributor pays to the new motor vehicle dealer for parts used in warranty or recall related service shall be fair and reasonable and, at the option of the new motor vehicle dealer, may be determined pursuant to subsection E of this section.

E. The new motor vehicle dealer may declare the retail rates that it customarily charges for parts or labor or both parts and labor by submitting to the manufacturer or distributor the lesser of one hundred sequential, nonwarranty, customer-paid service repair orders or ninety consecutive days of customer-paid service repair orders for warranty-like repairs made not more than one hundred eighty days before the submission. The new motor vehicle dealer’s retail labor rate shall be determined by dividing the amount of the dealer’s total labor sales contained in the submitted repair orders by the total number of labor hours that generated those sales. The new motor vehicle dealer’s retail rate for parts shall be a percentage determined by dividing the total sales for parts in the submitted repair orders by the new motor vehicle dealer’s total cost for those parts, minus one, multiplied by one hundred to produce a percentage. Declared rates are presumed to be fair and reasonable except that a manufacturer or distributor, within thirty days after receiving the new motor vehicle dealer’s submission, may rebut the presumption by reasonably substantiating that the rate or rates are inaccurate or unreasonable compared to other similarly situated same line-make new motor vehicle dealers in this state. The new motor vehicle dealer’s declared parts, labor or both parts and labor rates shall go into effect thirty days following the manufacturer’s or distributor’s receipt of the declaration, unless the manufacturer or distributor timely sends a rebuttal of the declared rate or rates to the new motor vehicle dealer. If any of the declared rates are rebutted, the manufacturer or distributor shall propose an adjustment of the rebutted rate or rates within thirty days after receiving the new motor vehicle dealer’s submission. If the new motor vehicle dealer does not agree with the proposed adjusted rate or rates, it may file a protest with the director within thirty days after receipt of the manufacturer’s or distributor’s proposal. If a protest is timely filed, the director shall inform the manufacturer or distributor that a timely protest has been filed and that a hearing will be held on the protest if any available manufacturer or distributor mediation opportunity has been used and was unsuccessful in reaching an agreement between the parties.

F. In calculating the retail rate or rates that a new motor vehicle dealer customarily charges for parts or labor, the following work may not be included in the calculation:

1. Repairs for manufacturer or distributor special events, specials or promotional discounts for retail customer repairs.

2. Parts sold at wholesale.

3. Engine assemblies and transmission assemblies, if the new motor vehicle dealer agrees to be compensated for those assemblies with a handling charge instead of a retail parts markup.

4. Routine maintenance not covered under any retail customer warranty, such as fluids, filters and belts not provided in the course of repairs.

5. Nuts, bolts, fasteners and similar items that do not have individual part numbers.

6. Vehicle reconditioning.

G. The manufacturer, factory branch, distributor or distributor branch may reasonably and periodically audit a new motor vehicle dealer to determine the validity of paid claims for dealer compensation or any charge-backs for warranty parts or service compensation. Audits shall only be for the twelve month period immediately following the date of the payment. This limitation does not apply if the manufacturer, factory branch, distributor or distributor branch reasonably suspects fraud. As a result of an audit that is authorized by this subsection, the manufacturer or distributor has the right to charge back to the new motor vehicle dealer the amount of any previously paid claim after the new motor vehicle dealer has had notice and an opportunity to participate in any available manufacturer or distributor mediation processes and all legal appeals have been exhausted if mediation failed to result in an agreement.

H. The manufacturer, factory branch, distributor or distributor branch shall reserve the right to reasonable periodic audits to determine the validity of paid claims for dealer compensation or any charge-backs for consumer or dealer incentives. Audits shall only be for a one year period immediately following the date of the payment. This limitation does not apply if the manufacturer, factory branch, distributor or distributor branch reasonably suspects fraud. As a result of an audit authorized by this subsection, the manufacturer or distributor has the right to charge back to the new motor vehicle dealer the amount of any previously paid claim after the new motor vehicle dealer has had notice and an opportunity to participate in any available manufacturer or distributor mediation processes and all legal appeals have been exhausted if mediation failed to result in an agreement.

I. All claims by new motor vehicle dealers under this section for labor and parts and all claims for compensation relative to any sales incentive programs shall be paid within thirty days after approval by the manufacturer or distributor subject to the manufacturer’s or distributor’s right to audit the claims provided in subsection G or H of this section. All claims shall be either approved or disapproved within thirty days after receipt on forms and in the manner specified by the manufacturer or distributor. Any claim not disapproved in writing or by means of electronic transmission within thirty days after receipt is deemed approved, and payment must be made within thirty days after approval.

J. If a manufacturer or distributor furnishes a part or component to a new motor vehicle dealer, at no cost, to use in performing repairs under a recall, campaign service action or warranty repair, the manufacturer or distributor shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this section by compensating the dealer the retail parts rate on the wholesale cost for the part or component as listed in the manufacturer’s or distributor’s price schedule, minus the wholesale cost for the part or component.

K. A manufacturer or distributor may not require a new motor vehicle dealer to establish the retail rates customarily charged by the dealer for parts or labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time-consuming to provide calculations, including part-by-part or transaction-by-transaction calculations. A new motor vehicle dealer may not declare any new retail rate more than once in any twelve-month period. A manufacturer or distributor may use the repair orders submitted by a new motor vehicle dealer under subsection E of this section to validate any or all of a new motor vehicle dealer’s current warranty reimbursement rates or require a new motor vehicle dealer to submit, not more than once every twelve months, repair orders pursuant to this section to validate the new motor vehicle dealer’s retail rate or rates. If a manufacturer or distributor finds that any of a new motor vehicle dealer’s retail rates have declined, the manufacturer or distributor may prospectively reduce the respective warranty reimbursement rate.

L. If the new motor vehicle dealer has otherwise properly submitted the claim pursuant to the manufacturer’s or distributor’s warranty or incentive program guidelines, a manufacturer or distributor may not deny a claim by a new motor vehicle dealer for reimbursement of any warranty parts or service compensation or any consumer or dealer incentive compensation based solely on a new motor vehicle dealer’s incidental failure to comply with a specific claim processing requirement that does not put into question the legitimacy of the claim. If a claim is rejected for such an incidental requirement the new motor vehicle dealer may correct or complete and resubmit a previously submitted warranty or incentive claim for a period of up to sixty days following the new motor vehicle dealer’s receipt of first notice of the failure from the manufacturer or distributor. A manufacturer or distributor is not required to approve any such warranty or incentive claim if all claim processing requirements are not complied with by the new motor vehicle dealer within the time periods prescribed by this section.

M. If a new motor vehicle dealer sells or leases a vehicle to a customer who exports the vehicle to a foreign country, unless the manufacturer, distributor or importer proves that the new motor vehicle dealer knew or reasonably should have known that the vehicle would be exported, a manufacturer, distributor or importer shall not do any of the following:

1. Refuse to sell, allocate or deliver new motor vehicles to the new motor vehicle dealer.

2. Charge back to or withhold payments or other things of value from the new motor vehicle dealer that the new motor vehicle dealer otherwise would be eligible for under an incentive program or contest.

3. Prevent a new motor vehicle dealer from participating in any sales promotion or program.

4. Take an adverse action against a new motor vehicle dealer, including reducing vehicle allocations or terminating or threatening to terminate a dealer.

N. There is a rebuttable presumption that the new motor vehicle dealer described in subsection M of this section did not know or should not have reasonably known that the vehicle described in subsection M of this section would be exported. The presumption may be rebutted by a preponderance of the evidence that the new motor vehicle dealer knew or should have reasonably known that the vehicle was to be exported.

O. If a timely protest is filed under subsection E of this section, the director shall:

1. Enter an order fixing the time and place of a hearing on the protest. The hearing shall be held within seventy-five days after the date of the order.

2. Send by certified mail a copy of the order to the dealer and the manufacturer.

3. Appoint a member of the Arizona state bar who shall be designated as an administrative law judge to conduct the hearing and who shall be compensated under a contractual relationship.

P. Prehearing discovery shall be conducted pursuant to the Arizona rules of civil procedure.

Q. Evidence that would be admissible under the issues in such an action in a state or federal court is admissible in a hearing held by the administrative law judge. The administrative law judge shall reasonably apportion all costs between the parties, including compensation for the administrative law judge’s services. The administrative law judge may:

1. Issue subpoenas.

2. Administer oaths.

3. Compel the attendance of witnesses and the production of books, papers, documents and all other evidence.

4. Apply to the superior court in the county in which the hearing is held for a court order enforcing this section.

R. A transcript of the testimony of all witnesses taken at the hearing shall be made and preserved. Within forty-five days after the hearing the administrative law judge shall make written findings of fact and conclusions of law and enter a final order.

S. A party to the hearing before the administrative law judge may appeal pursuant to title 12, chapter 7, article 6. An appeal of a decision of an administrative law judge has preference over other civil matters and shall be heard at the earliest practicable date.

T. As a condition to the appeal, the appealing party shall file a cash bond, supersedeas bond or its equivalent with the director. The bond shall be sufficient in amount to cover the damages incurred by the prevailing party, but the amount of the bond may not exceed the lesser of fifty thousand dollars or ten percent of the appealing party’s net worth. The appealing party may file alternatives to cash such as certificates of deposit purchased from a financial institution licensed to do business in this state pursuant to title 6 or bonds of the United States government.

U. A manufacturer shall compensate its new motor vehicle dealers for all labor and parts that are required to perform recall repairs. The compensation shall be fair and reasonable and, at the option of the new motor vehicle dealer, may be determined pursuant to subsection E of this section. If parts or a remedy is not reasonably available to perform a recall service or repair on a used motor vehicle held for sale by the new motor vehicle dealer that is authorized to sell new motor vehicles of the same line-make of the recalled motor vehicle within thirty days after the manufacturer issues a stop-sale or do not drive notification on the used motor vehicle, the manufacturer shall compensate the new motor vehicle dealer at a rate of at least 1.5 percent of the value of the used motor vehicle per month, or prorated portion of a month when applicable, until a date when the recall parts or remedy are delivered to the dealer or when the vehicle is no longer in the new motor vehicle dealer’s inventory.

V. The value of the used motor vehicle that is subject to a stop-sale or do not drive notification shall be the average trade-in value for used vehicles as determined by reference to a nationally recognized publication that reports on used motor vehicle values.

W. It is a violation of this section for a manufacturer to reduce the amount of compensation that is otherwise owed to a new motor vehicle dealer, whether through a chargeback, removal from an incentive program, reduction in amount owed under an incentive program or any other means, because the new motor vehicle dealer has submitted a claim for compensation under subsection U of this section or was otherwise compensated for a vehicle that is subject to a recall if a stop-sale or do not drive notification has been issued.

X. All reimbursement claims that are made by a new motor vehicle dealer pursuant to subsection U of this section for recall remedies or repairs or for compensation if no part or repair is reasonably available and the used motor vehicle is subject to a stop-sale or do not drive notification shall be made in compliance with at least one of the following:

1. In a like manner as a warranty reimbursement claim under this section.

2. At a rate set forth in a national compensation program that the manufacturer manages if the compensation provided to the new motor vehicle dealer equals or exceeds the reimbursement level for a claim that is determined as a warranty reimbursement claim pursuant to paragraph 1 of this subsection.

3. At the level set forth in the national compensation program without further consideration if the manufacturer and new motor vehicle dealer agree.

Y. The manufacturer shall approve or disapprove a claim within thirty days after it is submitted to the manufacturer in the manner and on the forms the manufacturer reasonably prescribes. The manufacturer shall pay a claim within thirty days after approval of the claim. Any claim that is not specifically disapproved in writing by the manufacturer within thirty days following the manufacturer’s receipt of the claim is deemed approved.

Z. Subsections U through Y of this section apply only to used motor vehicles that are subject to safety or emissions recalls pursuant to and recalled in accordance with federal law and for which a stop-sale or do not drive notification has been issued and to motor vehicle manufacturers and new motor vehicle dealers with used motor vehicles of the line-make that the new motor vehicle dealer is franchised to sell or on which the new motor vehicle dealer is authorized to perform recall repairs.

AA. Subsections U through Y of this section apply only to new motor vehicle dealers holding an affected used motor vehicle for sale that was any of the following:

1. In inventory at the time the stop-sale or do not drive notification was issued.

2. Taken in the used motor vehicle inventory of the new motor vehicle dealer as a consumer trade-in incident to the purchase of a new motor vehicle from the new motor vehicle dealer after the stop-sale or do not drive notification was issued.

3. Properly taken in the used motor vehicle inventory of the new motor vehicle dealer as a lease return vehicle returned to the new motor vehicle dealer in accordance with the terms of the applicable contract.

BB. For the purposes of this section, “stop-sale or do not drive notification” means a notification that is issued by a manufacturer to some or all of its franchised dealerships and that states that certain used motor vehicles in the dealerships’ inventories shall not be sold or leased, either at retail or wholesale, due to a federal safety defect or noncompliance recall or a federal or California emissions recall.

CALIFORNIA

3065. (a) Every franchisor shall properly fulfill every warranty agreement made by it and adequately and fairly compensate each of its franchisees for labor and parts used to satisfy the warranty obligations of the franchisor, including, but not limited to, diagnostics, repair, and servicing and shall file a copy of its warranty reimbursement schedule with the board. The warranty reimbursement schedule shall be reasonable with respect to the time and compensation allowed to the franchisee for the warranty diagnostics, repair, servicing, and all other conditions of the obligation, including costs directly associated with the disposal of hazardous materials that are associated with a warranty repair.

 (1) The franchisor shall use time allowances for the diagnosis and performance of work and service that are reasonable and adequate for a qualified technician to perform the work or services. A franchisor shall not unreasonably deny a written request submitted by a franchisee for modification of a franchisor’s uniform time allowance for a specific warranty repair, or a request submitted by a franchisee for an additional time allowance for either diagnostic or repair work on a specific vehicle covered under warranty, provided the request includes any information and documentation reasonably required by the franchisor to assess the merits of the franchisee’s request. 

(2) A franchisor shall not replace, modify, or supplement the warranty reimbursement schedule to impose a fixed percentage or other reduction in the time or compensation allowed to the franchisee for warranty repairs not attributable to a specific repair. A franchisor may reduce the allowed time or compensation applicable to a specific warranty repair only upon 15 days’ prior written notice to the franchisee.

 (3) Any protest challenging a reduction in time or compensation applicable to specific parts or labor operations shall be filed within six months following the franchisee’s receipt of notice of the reduction, and the franchisor shall have the burden of establishing the reasonableness of the reduction and adequacy and fairness of the resulting reduction in time or compensation. 

(b) In determining what constitutes a reasonable warranty reimbursement schedule under this section, a franchisor shall compensate each of its franchisees for parts and labor at rates equal to the franchisee’s retail labor rate and retail parts rate, as established pursuant to Section 3065.2. Nothing in this subdivision prohibits a franchisee and a franchisor from entering into a voluntary written agreement signed by both parties that compensates for labor and parts used to satisfy the warranty obligations of the franchisor at rates other than the franchisee’s retail rates, provided that the warranty reimbursement schedule adequately and fairly compensates the franchisee. 

(c) If any franchisor disallows a franchisee’s claim for a defective part, alleging that the part, in fact, is not defective, the franchisor shall return the part alleged not to be defective to the franchisee at the expense of the franchisor, or the franchisee shall be reimbursed for the franchisee’s cost of the part, at the franchisor’s option. 

(d) (1) All claims made by franchisees pursuant to this section shall be either approved or disapproved within 30 days after their receipt by the franchisor. Any claim not specifically disapproved in writing within 30 days from receipt by the franchisor shall be deemed approved on the 30th day.

COLORADO

44-20-141.5. Fulfillment and compensation for warranty and recall obligations – definitions. 

(1) As used in this section: 

(a) “Manufacturer” includes a manufacturer, a distributor, and a manufacturer representative. 

(b) “Nonwarranty repair” means a diagnosis, repair, labor, or part for which payment was made by a person other than a manufacturer and that was not a warranty obligation. “Nonwarranty repair” also means customer-pay repairs, labor, or parts. 

(c) “Part” means an accessory, a part, or a component used to repair a motor vehicle. “Part” includes engine and transmission parts and all motor vehicle assemblies. Colorado Revised Statutes 2018 Page 270 of 460 Uncertified Printout 

(d) “Repair” means diagnosing, work, and labor performed by a motor vehicle dealer for which the motor vehicle dealer is making a claim for compensation.

 (e) “Retail labor rate” means the rate for labor calculated by the motor vehicle dealer in accordance with subsection (4) of this section that a manufacturer is required to pay a motor vehicle dealer in accordance with subsection (2) of this section. 

(f) “Retail parts markup percentage” means the percentage markup on parts calculated by the motor vehicle dealer in accordance with subsection (4) of this section that a manufacturer is required to pay a motor vehicle dealer in accordance with subsection (2) of this section.

 (g) “Warranty obligation” means diagnosing and repairing a motor vehicle in accordance with any warranty, recall, or certified preowned warranty, under which a manufacturer makes a repair commitment to a consumer or motor vehicle dealer. 

(2) At a motor vehicle dealer’s request, a manufacturer shall timely compensate the motor vehicle dealer at the retail labor rate and the retail parts markup percentage in accordance with subsection (3) of this section for all labor performed and parts used by the motor vehicle dealer for covered repairs performed in accordance with the warranty obligation, if the retail labor rate and retail parts markup percentage are reasonably consistent with the requirements of this section that concern the retail labor rate and parts markup percentage. 

(3) (a) A motor vehicle dealer may establish the retail labor rate and the retail parts markup percentage by submitting to the manufacturer either of the following as decided by the motor vehicle dealer: (I) One hundred sequential repair orders containing nonwarranty repairs, which may include a nonwarranty repair that is included in a repair order with a warranty obligation repair, that have been paid by a consumer and closed by the time of submission; or (II) All repair orders for nonwarranty repairs, which may include a nonwarranty repair that is included in a repair order with warranty obligation repair, that have been paid by a consumer and closed by the time of submission for a period of ninety consecutive days. 

(b) A manufacturer shall not disqualify a repair order under this subsection (3) because the repair order contains both warranty and nonwarranty repairs, but only nonwarranty repairs are used in the calculation of the retail labor rate and the retail parts markup percentage. 

(c) A motor vehicle dealer may submit one set of repair orders for the purpose of calculating both its retail labor rate and the retail parts markup percentage or may submit separate sets of repair orders for purposes of calculating only its retail labor rate or for purposes of calculating only its retail parts markup percentage. If the rates from the calculation are ten percent higher or lower than the current rates, the manufacturer may request additional repair orders for the ninety days before or after the submitted repair orders for purposes of alteration. 

(d) Except with regard to a request for additional repair orders as provided in subsection (3)(c) of this section, the repair orders submitted under this subsection (3) to determine the retail labor rate must contain only repair orders from the last ninety days before the date the submission is sent to the manufacturer. 

(e) Except with regard to a request for additional repair orders as provided in subsection (3)(c) of this section, the repair orders submitted under this subsection (3) to determine the retail parts markup percentage must contain only repair orders from the last ninety days before the date the submission is sent to the manufacturer.

 (4) (a) Except as provided in subsection (4)(c) of this section, to calculate the retail labor rate, the motor vehicle dealer must divide the motor vehicle dealer’s total nonwarranty labor sales generated from the nonwarranty repairs submitted under subsection (3) of this section by the total number of labor hours that generated those total labor sales. 

(b) Except as provided in subsection (4)(c) of this section, to calculate the retail parts markup percentage, the motor vehicle dealer must divide the motor vehicle dealer’s total parts sales generated from nonwarranty repairs submitted under subsection (3) of this section by the amount of the motor vehicle dealer’s total cost for those parts, subtracting one from this amount, and then multiplying the amount by one hundred.

 (c) The calculation of the retail labor rate in subsection (4)(a) of this section and of the retail parts markup percentage in subsection (4)(b) of this section do not include parts used or labor performed: 

(I) For manufacturer or motor vehicle dealer special events, one-time specials, express service, and quoted-price promotional discounts, but this exclusion from the calculation does not include broadly applicable discounts offered by the dealer, such as percentage-off coupons, that apply to repairs and parts;

 (II) For parts sold at wholesale;

 (III) For routine maintenance, including replacement fluids, filters, batteries, bulbs, nuts, bolts, fasteners, tires, and belts;

 (IV) That do not have individual part numbers; 

(V) For the repairs of a motor vehicle owned by the motor vehicle dealer, an affiliate of the motor vehicle dealer, or an employee of either the motor vehicle dealer or the affiliate; 

(VI) For motor vehicle dealer reconditioning;

 (VII) For window tint, protective film, masking products, or window replacement labor; (VIII) For manufacturer approved and reimbursed goodwill repairs or replacements; 

(IX) For emission inspections required by law; 

(X) For safety inspections required by law; 

(XI) For which a volume discount was negotiated with a third-party payer, including government agencies, insurance carriers, and fleet operators, but not including third-party warranty companies or service contract companies. 

(5) (a) Notwithstanding any manufacturer requirement, policy, procedure, guideline, or standard, a motor vehicle dealer may submit to the manufacturer the retail labor rate or retail parts markup percentage as each is calculated in accordance with subsection (4) of this section.

 (b) A motor vehicle dealer may request in writing, not more often than once annually, an increase in compensation for labor at the retail labor rate for warranty obligations. 

(c) A motor vehicle dealer may request in writing, not more often than once annually, an increase in compensation for parts at the retail parts markup percentage for warranty obligations. 

(d) (I) A manufacturer may conduct a periodic review of a motor vehicle dealer’s service records to verify the continuing accuracy of the retail labor rate or retail parts markup percentage proposed by or in effect for the dealer.

 (II) A manufacturer shall not conduct a periodic review more than once per calendar year. This periodic review is not an audit in accordance with section 44-20-135. 

(6) (a) (I) If the submitted calculation of the retail labor rate or retail parts markup percentage is materially inaccurate or is substantially different than the rate of or percentage of other similarly situated same line-make dealers within the state, a manufacturer may contest the motor vehicle dealer’s submitted calculations of the retail labor rate or retail parts markup percentage by delivering a notice to the motor vehicle dealer within forty-five days after receiving the submission in accordance with subsection (3) of this section from the motor vehicle dealer. To comply with this subsection (6), the notice must:

 (A) Include an explanation of the reasons that the manufacturer believes the calculation is subject to contest; (B) Provide evidence substantiating the manufacturer’s position; and (C) Propose an adjustment of the contested retail labor rate or retail parts markup percentage. (II) Upon the discovery of new relevant information by the manufacturer, the manufacturer may modify the grounds for contesting the retail labor rate or retail parts markup percentage after delivering the notice to the motor vehicle dealer under this subsection (6), but the modification does not change the timing requirements in this section. 

(b) If the manufacturer does not timely contest the motor vehicle dealer’s calculation of the retail labor rate or retail parts markup percentage in accordance with this subsection (6), the uncontested retail labor rate or retail parts markup percentage becomes effective forty-five days after the manufacturer has received the submission from the motor vehicle dealer, and thereafter, the manufacturer shall use the motor vehicle dealer’s increased retail labor rate and retail parts markup percentage in calculating compensation for warranty obligations until a subsequent calculation of the motor vehicle dealer’s retail labor rate or retail parts markup percentage is established in accordance with this section. 

(c) (I) If the manufacturer timely contests the motor vehicle dealer’s calculation of the retail labor rate or retail parts markup percentage and the manufacturer and motor vehicle dealer are unable to resolve the disagreement, the motor vehicle dealer may seek a determination by filing a complaint with a court of competent jurisdiction or the executive director no later than sixty days after the new motor vehicle dealer receives the manufacturer’s challenge to the determined retail labor rate or retail parts markup percentage. 

(II) In a court proceeding, the court shall determine, in accordance with this section, the proper retail labor rate or retail parts markup percentage.

 (III) Any retail labor rate or retail parts markup percentage established through the proceeding applies retroactively to calculate reimbursement for any labor and part beginning thirty days after the manufacturer received the submission required by subsection (3) of this section.

 (IV) If the manufacturer contests the motor vehicle dealer’s calculation of the retail labor rate or retail parts markup percentage, the manufacturer shall continue to reimburse the motor vehicle dealer for warranty obligation repairs at the retail labor rate and retail parts markup percentage as both existed before the motor vehicle dealer submitted a request for an increase under subsection (5) of this section. When the manufacturer and motor vehicle dealer agree on the retail labor rate or retail parts markup percentage, the manufacturer shall pay any difference between the amount the manufacturer compensated the dealer and the amount agreed to by the motor vehicle dealer and manufacturer as of thirty days after the manufacturer received the submission required by subsection (3) of this section.

 (d) In the court proceeding, the court shall award the prevailing party reasonable attorney fees and costs. If the motor vehicle dealer prevails, the court shall award as damages the full amount of reimbursement that should have been paid to the motor vehicle dealer. 

(7) When calculating the retail labor rate and the retail parts markup percentage, the manufacturer: times for new line-makes that are inconsistent with the existing rates; 

(b) Shall, if the manufacturer furnishes a part to a motor vehicle dealer at no cost for use in performing a repair under a warranty obligation, compensate the motor vehicle dealer for the authorized repair part by paying the dealer an amount equal to the retail parts markup percentage multiplied by the cost the dealer would have paid for the authorized part as listed in the manufacturer’s price schedule;

 (c) Shall not establish a different part number for repairs made in accordance with a warranty obligation than the part number established for nonwarranty repairs solely to provide a lower compensation to a motor vehicle dealer;

(d) Shall not recover or attempt to recover, directly or indirectly, in whole or in part, any of its costs from the motor vehicle dealer for compensating the motor vehicle dealer under this section; 

(e) Shall not, directly or indirectly, in whole or in part, assess penalties or surcharges to the motor vehicle dealer, limit allocation of motor vehicles or parts to the motor vehicle dealer, or take any adverse action based on the motor vehicle dealer’s exercise of the dealer’s rights under this section;

 (f) Shall not require from a motor vehicle dealer any information that is unduly burdensome or time consuming to obtain, including any part-by-part or transaction-bytransaction calculations.

 (8) Nothing in this section prohibits a manufacturer from increasing the price of a motor vehicle or motor vehicle part in the normal course of business.

 (9) This section does not apply to any of the following that are involved in the manufacturing of or selling of recreational vehicles:

 (a) A motor vehicle dealer; (b) A manufacturer or component manufacturer; (c) A distributor; or (d) A manufacturer representative.

CONNECTICUT

Sec. 42-110w. Warranties on receiving equipment, reimbursement for costs. Service information and replacement parts. Schematics and pictorials. 

(a) Any manufacturer who makes an express warranty, as that term is defined in section 42a-2-313, in a sale of receiving equipment, as defined in section 20-342, for personal, family or household purposes and who designates a service representative within the state to honor the terms of such warranty shall reimburse such representative for the cost of providing the services or repairs required under such warranty. The amount of such reimbursement shall be identical to the amount charged by such service representative for services and repairs, including parts and labor, to customers who are not covered by any warranty protection. The quality of service and repairs by such service representative in honoring the terms of any warranty shall be consistent with the services and repairs provided to customers who are not covered by any warranty protection.

 (b) Each manufacturer of receiving equipment doing business in this state shall make available to such service representative current service information and an adequate supply of replacement parts. Such information and parts shall be provided by distributors located in the state within thirty days of the date of order and shall remain available for not less than four years after the date of the final sale of any discontinued model or type of receiving equipment. 

(c) Unless the parties otherwise agree, any services or repairs arising under such express warranty shall be performed within the state if competent and qualified repair or service facilities are available. 

(d) In any such sale of receiving equipment having a value of fifty dollars or more, the manufacturer shall provide to the buyer service literature and legible schematics or pictorials including, but not limited to, wave forms and ohmic, voltage and wattage ratings.

DELAWARE

§ 4903 Sales incentives; warranty and predelivery obligations to new motor vehicle dealers.

 (a) Each new motor vehicle manufacturer shall specify in writing to each of its new motor vehicle dealers licensed in this State the dealer’s obligations for predelivery preparation and warranty service on its products, shall compensate the new motor vehicle dealer for such service required of the dealer by the manufacturer, and shall provide dealer the schedule of compensation to be paid such dealer for parts, work and service in connection therewith, and the time allowance for the performance of such work and service.

 (b) In no event shall such schedule of compensation fail to include reasonable compensation for diagnostic work, as well as parts, repair service and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. With respect to parts and labor warranty reimbursement, reasonable compensation shall not be less than the rate charged by such dealer for like services to nonwarranty customers for nonwarranty parts, service and repairs, provided such rate is reasonable. 

(1) For the purposes of this provision, the dealer’s rate charged to nonwarranty customers for parts and labor shall be established by the dealer submitting to the manufacturer 100 sequential customer paid service repair orders or 90 days of customer paid service repair orders, whichever is less, covering like repairs made no more than 180 days before the submission of such customer paid service repair orders and declaring the schedule of compensation. The new schedule of compensation shall take effect within 30 days after the initial submission to the manufacturer and shall be presumed to be fair and reasonable. However, within 30 days following receipt of the declared schedule of compensation from the dealer, the manufacturer may make reasonable requests for additional information supporting the declared schedule of compensation. The 30-day time frame in which the manufacturer shall make the schedule of compensation effective shall commence following receipt from the dealer of any reasonably requested supporting information. No manufacturer shall require a motor vehicle dealer to establish a schedule of compensation by any other methodology or require supportive information that is unduly burdensome or time consuming to provide including, but not limited to, part by part or transaction by transaction calculations. The dealer shall not request a change in the schedule of compensation more than once every 9 months. 

(2) For the purposes of this provision, the following parts or types of repairs shall be excluded from the calculation: a. Repairs for manufacturer special events and manufacturer discounted service campaigns; b. Parts sold at wholesale or parts discounted by a dealer for repairs made in group fleet, insurance, or other third-party payer service work or parts used in repairs of government agencies’ repairs for which volume discounts have been negotiated; c. Tires replaced due to normal wear; or d. Routine maintenance not covered under any retail customer warranty such as fluids, filters and belts not provided in the course of repairs. 

(3) A manufacturer shall not take or threaten to take adverse action against a dealer who seeks to obtain compensation pursuant to this provision, including but not limited to, creating or implementing an obstacle or process that is inconsistent with the manufacturer’s obligations to the dealer under this provision. 

(4) Within 30 days of receiving the manufacturer’s notice of denial of the dealer’s parts and/or labor submission pursuant to this subsection, any such new motor vehicle dealer may file with the Public Service Commission a protest to the manufacturer’s denial. In the event a protest is filed, the manufacturer possesses the burden of proof to establish that the dealer’s submission did not meet the respective submission requirements contained within this provision. In the event a dealer prevails in a protest filed under this provision, the dealer’s increased parts and/or labor reimbursement shall be provided retroactive to the date the submission would have been effective pursuant to the terms of this section but for the manufacturer’s denial.

FLORIDA

320.696 Warranty responsibility.—

(1)(a) A licensee shall timely compensate a motor vehicle dealer who performs work to maintain or repair a licensee’s product under a warranty or maintenance plan, extended warranty, certified pre-owned warranty, or a service contract, issued by the licensee or its common entity, unless issued by a common entity that is not a manufacturer; to fulfill a licensee’s delivery or preparation procedures; or to repair a motor vehicle as a result of a licensee’s or common entity’s recall, campaign service, authorized goodwill, directive, or bulletin.

(b) As used in this section, the terms “compensate” and “compensation” shall include all labor and parts included in the work as provided in this section. The term “labor” shall include time spent by employees for diagnosis and repair of a vehicle. The term “parts” shall include replacement parts and accessories. The term “retail customer repair” means work, including parts and labor, performed by a dealer which does not come within the provisions of a licensee’s or its common entity’s warranty, extended warranty, certified pre-owned warranty, service contract, or maintenance plan, and excludes parts and labor described in paragraphs (3)(b) and (4)(c).

(c) Compensation not paid to a motor vehicle dealer within 30 days after receipt of a claim is not timely. A licensee shall not establish or implement a term, policy, or procedure different from those described in this section for any motor vehicle dealer to obtain compensation under this section, and shall not pay a motor vehicle dealer less than amounts due pursuant to this section.

(2) A licensee shall not take or threaten to take adverse action against a motor vehicle dealer who seeks to obtain compensation pursuant to this section. As used in this subsection, the term “adverse action” includes, without limitation, acting or failing to act, other than in good faith; creating or implementing an obstacle or process that is inconsistent with the licensee’s obligations to the dealer under this section; hindering, delaying, or rejecting the proper and timely payment of compensation due under this section to a dealer; establishing, implementing, enforcing, or applying any policy, standard, rule, program, or incentive regarding compensation due under this section other than in a uniform and nondisparate manner among the licensee’s dealers in this state; conducting or threatening to conduct any warranty, retail customer repair, or other service-related audit more frequently than once each calendar year; or denying, reducing, or charging back a warranty claim because of a dealer’s failure to comply with all of the licensee’s requirements for describing or processing a claim.

(3)(a) A licensee shall compensate a motor vehicle dealer for parts used in any work described in subsection (1). The compensation may be an agreed percentage markup over the licensee’s dealer cost, but if an agreement is not reached within 30 days after a dealer’s written request, compensation for the parts is the greater of:

1. The dealer’s arithmetical mean percentage markup over dealer cost for all parts charged by the dealer in 50 consecutive retail customer repairs made by the dealer within a 3-month period before the dealer’s written request for a change in reimbursement pursuant to this section, or all of the retail customer repair orders over that 3-month period if there are fewer than 50 retail customer repair orders in that period. The motor vehicle dealer shall give the licensee 10 days’ written notice that it intends to make a written request to the licensee for a warranty parts reimbursement increase and permit the licensee, within that 10-day period, to select the initial retail customer repair for the consecutive repair orders that will be attached to the written request used for the markup computation, provided that if the licensee fails to provide a timely selection, the dealer may make that selection. No repair order shall be excluded from the markup computation because it contains both warranty, extended warranty, certified pre-owned warranty, maintenance, recall, campaign service, or authorized goodwill work and a retail customer repair. However, only the retail customer repair portion of the repair order shall be included in the computation, and the parts described in paragraph (b) shall be excluded from the computation;

2. The licensee’s highest suggested retail or list price for the parts; or

3. An amount equal to the dealer’s markup over dealer cost that results in the same gross profit percentage for parts used in work done under subsection (1) as the dealer receives for parts used in the customer retail repairs, as evidenced by the average of said dealer’s gross profit percentage in the dealer’s financial statements for the 2 months preceding the dealer’s request.

If a licensee reduces the suggested retail or list price for any replacement part or accessory, it also shall reduce, by at least the same percentage, the cost to the dealer for the part or accessory. The dealer’s markup or gross profit percentage shall be uniformly applied to all of the licensee’s parts used by the dealer in performing work covered by subsection (1).

(b) In calculating the compensation to be paid for parts by the arithmetical mean percentage markup over dealer cost method in paragraph (a), parts discounted by a dealer for repairs made in group, fleet, insurance, or other third-party payer service work; parts used in repairs of government agencies’ repairs for which volume discounts have been negotiated; parts used in special events, specials, or promotional discounts for retail customer repairs; parts sold at wholesale; parts used for internal repairs; engine assemblies and transmission assemblies; parts used in retail customer repairs for routine maintenance, such as fluids, filters and belts; nuts, bolts, fasteners, and similar items that do not have an individual part number; and tires shall be excluded in determining the percentage markup over dealer cost.

(c) If a licensee furnishes a part or component to a motor vehicle dealer at no cost to use in performing repairs under a recall, campaign service action, or warranty repair, the licensee shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this subsection, less the dealer cost for the part or component as listed in the licensee’s price schedule.

(d) A licensee shall not establish or implement a special part or component number for parts used in predelivery, dealer preparation, warranty, extended warranty, certified pre-owned warranty, recall, campaign service, authorized goodwill, or maintenance-only applications if that results in lower compensation to the dealer than as calculated in this subsection.

(4)(a) A licensee shall compensate a motor vehicle dealer for labor performed in connection with work described in subsection (1) as calculated in this subsection.

(b) Compensation paid by a licensee to a motor vehicle dealer may be an agreed hourly labor rate. If, however, an agreement is not reached within 30 days after the dealer’s written request, the dealer may choose to be paid the greater of:

1. The dealer’s hourly labor rate for retail customer repairs, determined by dividing the amount of the dealer’s total labor sales for retail customer repairs by the number of total labor hours that generated those sales for the month preceding the request, excluding the work in paragraph (c); or

2. An amount equal to the dealer’s markup over dealer cost that results in the same gross profit percentage for labor hours performed in work covered by subsection (1) as the dealer receives for labor performed in its customer retail repairs, as evidenced by the average of said dealer’s gross profit percentage in the dealer’s financial statements provided to the licensee for the 2 months preceding the dealer’s written request, if the dealer provides in the written request the arithmetical mean of the hourly wage paid to all of its technicians during that preceding month. The arithmetical mean shall be the dealer cost used in that calculation.

After an hourly labor rate is agreed or determined, the licensee shall uniformly apply and pay that hourly labor rate for all labor used by the dealer in performing work under subsection (1). However, a licensee shall not pay an hourly labor rate less than the hourly rate it was paying to the dealer for work done under subsection (1) on January 2, 2008. A licensee shall not eliminate flat-rate times from or establish an unreasonable flat-rate time in its warranty repair manual, warranty time guide, or any other similarly named document. A licensee shall establish reasonable flat-rate labor times in its warranty repair manuals and warranty time guides for newly introduced model motor vehicles which are at least consistent with its existing documents. As used in this subsection, the terms “retail customer repair” and “similar work” are not limited to a repair to the same model vehicle or model year, but include prior repairs that resemble but are not identical to the repair for which the dealer is making a claim for compensation.

(c) In determining the hourly labor rate calculated under subparagraph (b)1., a dealer’s labor charges for internal vehicle repairs; vehicle reconditioning; repairs performed for group, fleet, insurance, or other third-party payers; discounted repairs of motor vehicles for government agencies; labor used in special events, specials, or express service; and promotional discounts shall not be included as retail customer repairs and shall be excluded from such calculations.

(5) A licensee shall not review, change, or fail to pay a motor vehicle dealer for parts or labor determined under this section unless the dealer has requested a change, or the action is pursuant to the licensee’s written, predetermined schedule for increasing parts or labor compensation that is not contrary to any provision of this section. A dealer may make written requests for changes in compensation for parts or labor performed under this section not more than semiannually. The dealer shall attach supporting documentation to each written request. Any increase in parts or labor reimbursement determined thereafter to be owed to the dealer shall be paid pursuant to this section retroactively for all claims filed by a dealer 15 days after the date of the licensee’s receipt of the dealer’s written request.

(6) A licensee shall not recover or attempt to recover, directly or indirectly, any of its costs for compensating a motor vehicle dealer under this section.

(7) A licensee shall not require, influence, or attempt to influence a motor vehicle dealer to implement or change the prices for which it sells parts or labor in retail customer repairs. A licensee shall not implement or continue a policy, procedure, or program to any of its dealers in this state for compensation under this section which is inconsistent with this section.

(8) If a court determines with finality that any provision of this section is void or unenforceable, the remaining provisions shall not be affected but shall remain in effect.

GEORGIA

2016 Georgia Code

Title 10 – Commerce and Trade

Chapter 1 – Selling and Other Trade Practices

Article 22 – Motor Vehicle Franchise Practices

Part 3 – Motor Vehicle Warranty Practices

§ 10-1-641. Dealer’s predelivery preparation, warranty service, and recall work obligations to be provided in writing; recovery of costs

(a) (1) Each distributor, manufacturer, or warrantor:

(A) Shall specify in writing to each of its dealers in this state the dealer’s obligations for predelivery preparation including the repair of damages incurred in the transportation of vehicles as set forth in Code Section 10-1-642, recall work, and warranty service on its products;

(B) Shall compensate the dealer for such work and service required of the dealer by the distributor, manufacturer, or warrantor;

(C) Shall provide the dealer with a schedule of compensation to be paid such dealer for parts, work, and service in connection therewith; and

(D) Shall provide the dealer with a schedule of the time allowance for the performance of such work and service. Any such schedule of compensation shall include reasonable compensation for diagnostic work, repair service, and labor. Time allowances for the diagnosis and performance of such work and service shall be reasonable and adequate for the work to be performed.

(2) In the determination of what constitutes reasonable compensation for parts reimbursement and labor rates under this Code section, the principal factors to be considered shall be the retail price paid to dealers for parts and the prevailing hourly labor rates paid to dealers doing the repair, work, or service and to other dealers in the community in which the dealer doing the repair, work, or service is doing business for the same or similar repair, work, or service. However, in no event shall parts reimbursement paid to the dealer be less than the retail price for such parts being paid to such dealer by nonwarranty customers for nonwarranty parts replacement, and in no event shall the hourly labor rate paid to a dealer for such warranty repair, work, or service be less than the rate charged by such dealer for like repair, work, or service to nonwarranty customers for nonwarranty repair, work, or service.

(b) Manufacturers and distributors shall include in written notices of factory recalls to new motor vehicle owners and dealers the expected date by which necessary parts and equipment will be available to dealers for the correction of such defects. Manufacturers and distributors shall compensate any dealers in this state for repairs affected by all recalls.

(c) All such claims shall be either approved or disapproved within 30 days after their receipt on forms and in the manner specified by the manufacturer, distributor, or warrantor, and any claim not specifically disapproved in writing within 30 days after the receipt shall be construed to be approved and payment must follow within 30 days.

(d) Subject to subsection (c) of Code Section 10-1-645, a manufacturer or distributor shall not otherwise recover its costs from dealers within this state, including an increase in the wholesale price of a vehicle or surcharge imposed on a dealer solely intended to recover the cost of reimbursing the dealer for parts and labor pursuant to this Code section, provided that a manufacturer or distributor shall not be prohibited from increasing prices for vehicles or parts in the normal course of business.

HAWAII

§437-28 Suspension; revocation; fine; denial of issuance or renewal of a license (21) Being a manufacturer or distributor: 

(G) Has failed to adequately and fairly compensate its dealers for labor incurred by the dealer to perform under and comply with manufacturer’s warranty agreements. In no event shall any manufacturer or distributor pay its dealers a labor rate per hour for warranty work that is less than that charged by the dealer to the retail customers of the dealer nor shall the rates be more than the retail rates. All claims made by the dealers for compensation for delivery, preparation, and warranty work shall be paid within thirty days after approval and shall be approved or disapproved within thirty days after receipt. When any claim is disapproved, the dealer shall be notified in writing of the grounds for disapproval; §437-56 Reimbursement for parts.

 (a) In no event shall any manufacturer or distributor pay its dealers a markup on parts for warranty work that is less than that charged by the dealer to the retail customers of the dealer; provided that such dealer’s retail parts markup is not unreasonable when compared with that of same line make authorized franchise dealers of the manufacturer or distributor for identical merchandise or services in the State. 

(b) The retail markup charged by the dealer shall be established by submitting to the manufacturer or distributor a sufficient quantity of numerically consecutive repair orders from the most recent months to provide one hundred qualifying customer-paid repair orders. For a dealer unable to provide one hundred qualifying customer-paid repair orders out of all numerically consecutive repair orders within the two-month period prior to the submission, the dealer shall submit customer service repair orders of all types, including customer pay, warranty, and internal, for that two-month period. The repair orders shall contain the price and percentage markup. Dealers shall declare in their submission the average markup the dealer is declaring as its new parts reimbursement rate. The declared parts reimbursement markup shall take effect within ninety days after initial submission to the manufacturer or distributor and shall be presumed to be fair and reasonable. However, the manufacturer or distributor may make reasonable requests for additional information supporting the submission. The ninety-day timeframe in which the manufacturer or distributor shall make the declared parts reimbursement markup effective shall commence following receipt from the dealer of any reasonably requested supporting information. The dealer shall not request a change in the parts reimbursement markup more than once every twelve months. 

(c) In determining qualifying repair orders for parts, the following work shall not be included: repairs for manufacturer or distributor special events; repairs covered by any insurance or service contract; federal, state, or local government legislated vehicle emission or safety inspections; parts sold at wholesale or repairs performed at wholesale, which shall include any sale or service to a fleet of vehicles; engine assemblies and transmission assemblies; routine maintenance not covered under any retail customer warranty, such as fluids, filters, and belts not provided in the course of repairs; nuts, bolts, fasteners, and similar items that do not have an individual part number; tires; and vehicle reconditioning.

IDAHO

§ 49-1626. Payment for delivery preparation and warranty service

 (1) Each manufacturer or distributor shall specify in writing to each of its dealers licensed in this state, the dealer’s obligations for predelivery preparation and warranty service on its products, compensate the dealer for service required of the dealer by the manufacturer or distributor, provide the dealer a schedule of compensation to be paid the dealer for parts, work and service in connection with its products, and the time allowance for the performance of that work and service.

 (2) In no event shall a schedule of compensation fail to include reasonable compensation for diagnostic work, as well as repair service and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. 

(3) It is unlawful for a new vehicle manufacturer or distributor to fail to perform any warranty obligations or to fail to include in written notices of factory recalls to new vehicle owners and dealers, the expected date by which necessary parts and equipment will be available to dealers for the correction of those defects, or to fail to compensate any of the dealers in this state for repairs affected by recall. 

(4) A vehicle dealer may submit a warranty claim to a manufacturer or distributor if a warranty defect is identified and documented prior to the expiration of a manufacturer’s or distributor’s warranty: (a) While a franchise agreement is in effect; or (b) After the termination of a franchise agreement if the claim is for work performed while the franchise agreement was in effect. 

(5) All claims made by dealers pursuant to this section for labor and parts shall be paid within thirty (30) days following their approval. All claims shall be either approved or disapproved within thirty (30) days after their receipt, on forms and in the manner specified by the manufacturer or distributor, and any claim not specifically disapproved in writing within thirty (30) days after receipt shall be construed to be approved and payment must follow within thirty (30) days. 

(6) A dealer whose claim has been denied due to failure to comply with a specific claim processing requirement, such as a clerical error or other administrative technicality that does not put into question the legitimacy of the claim, may resubmit the corrected claim as provided for in subsection (7) of this section.

(7) A dealer shall have thirty (30) days from the date of notification by a manufacturer or distributor of a denial of a claim or a charge-back to the dealer to resubmit a claim for payment or compensation if the claim was denied for any of the reasons described in subsection (6) of this section, whether the charge-back was a direct or an indirect transaction, unless a longer period of time is provided for by the manufacturer or distributor. 

(8) Notwithstanding the terms of a franchise agreement or other contract with a dealer and except as provided in subsection (9) of this section, after the expiration of one (1) year after the date of payment of the warranty claim, a manufacturer or distributor shall not audit the records of a motor vehicle dealer to determine compliance with the terms of a warranty claim. Provided however, that the manufacturer or distributor may audit the dealer for fraudulent claims during any period for which an action for fraud may be commenced. 

(9) A manufacturer or distributor may make charge backs to a motor vehicle dealer if, after completion of an audit of the dealer’s records, the manufacturer or distributor can show, by a preponderance of the evidence, that: (a) With respect to a warranty claim, the repair work was improperly performed in a substandard manner or was unnecessary; or (b) The claim is unsubstantiated in accordance with the manufacturer [manufacturer’s] or distributor’s requirements. 

(10) Nothing in subsection (8) or (9) of this section shall prevent a manufacturer or distributor from instituting a legal action for fraud as provided for in section 5-218, Idaho Code. 

(11) The schedule of compensation for warranty parts and labor shall not be less than the rates charged by the dealer for similar service to retail customers for nonwarranty parts and labor; provided that such dealer’s retail rate is not unreasonable when compared with other motor vehicle franchises from the same or competitive lines for similar merchandise or services in the geographic area in which the dealer is engaged in business. 

(a) For purposes of determining the schedule of compensation paid to a dealer by the manufacturer or distributor, the following shall not be considered in determining amounts charged by the dealer to retail customers:

 (i) Menu-priced parts or services;

 (ii) Repairs for manufacturer or distributor special events; 

(iii) Repairs covered by any insurance or service contract; 

(iv) Vehicle emission or safety inspections required by federal, state or local governments; 

(v) Parts sold at wholesale or repairs performed at wholesale, which shall include any sale or service to a fleet of vehicles;

(vi) Engine assemblies and transmission assemblies; 

(vii) Routine maintenance not covered under any retail customer warranty including, but not necessarily limited to, maintenance involving fluids, filters and belts not provided in the course of repairs; 

(viii) Nuts, bolts, fasteners and similar items that do not have an individual part number;

 (ix) Tires; or 

(x) Vehicle reconditioning. 

(b) The dealer shall establish their schedule of compensation under the provisions of this section by submitting to the manufacturer or distributor one hundred (100) sequential customer paid service repair orders or ninety (90) days of customer paid service repair orders, whichever is less, covering repairs made no more than one hundred eighty (180) days before the submission of such customer paid service repair orders and declaring the schedule of compensation. The new schedule of compensation shall take effect within ninety (90) days after the initial submission to the manufacturer or distributor and shall be presumed to be fair and reasonable. However, within thirty (30) days following receipt of the declared schedule of compensation from the dealer, the manufacturer or distributor may make reasonable requests for additional information supporting the declared schedule of compensation. The ninety (90) day time frame in which the manufacturer or distributor shall make the schedule of compensation effective shall commence following receipt from the dealer of any reasonably requested supporting information. No manufacturer or distributor shall require a motor vehicle dealer to establish a schedule of compensation by any other methodology or require supportive information that is unduly burdensome or time consuming to provide including, but not limited to, part by part or transaction by transaction calculations. The dealer shall not request a change in the schedule of compensation more than once every twelve (12) months.

ILLINOIS

(815 ILCS 710/6) (from Ch. 121 1/2, par. 756) Sec. 6. Warranty agreements; claims; approval; payment; written disapproval.

 (a) Every manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division shall properly fulfill any warranty agreement and adequately and fairly compensate each of its motor vehicle dealers for labor and parts. 

(b) In no event shall such compensation fail to include reasonable compensation for diagnostic work, as well as repair service, labor, and parts. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. In the determination of what constitutes reasonable compensation under this Section, the principal factor to be given consideration shall be the prevailing wage rates being paid by the dealer in the relevant market area in which the motor vehicle dealer is doing business, and in no event shall such compensation of a motor vehicle dealer for warranty service be less than the rates charged by such dealer for like service to retail customers for nonwarranty service and repairs. The franchiser shall reimburse the franchisee for any parts provided in satisfaction of a warranty at the prevailing retail price charged by that dealer for the same parts when not provided in satisfaction of a warranty; provided that such motor vehicle franchisee’s prevailing retail price is not unreasonable when compared with that of the holders of motor vehicle franchises from the same motor vehicle franchiser for identical merchandise in the geographic area in which the motor vehicle franchisee is engaged in business. All claims, either original or resubmitted, made by motor vehicle dealers hereunder and under Section 5 for such labor and parts shall be either approved or disapproved within 30 days following their submission. All approved claims shall be paid within 30 days following their approval. The motor vehicle dealer who submits a claim which is disapproved shall be notified in writing of the disapproval within the same period, and each such notice shall state the specific grounds upon which the disapproval is based. The motor vehicle dealer shall be permitted to correct and resubmit such disapproved claims within 30 days of receipt of disapproval. Any claims not specifically disapproved in writing within 30 days from their submission shall be deemed approved and payment shall follow within 30 days.

INDIANA

IC 9-32-13-15.5Compensation for warranty services Sec. 15.5. 

(a) This section does not apply to manufacturers or distributors of manufactured housing, heavy duty vocational vehicles (as defined in 49 CFR 523.8), or recreational vehicles. 

(b) Unless otherwise agreed, it is an unfair practice for a manufacturer or distributor to fail to compensate a dealer anything less than the dealer’s retail rates for parts or labor the dealer uses in performing the warranty services of the manufacturer or distributor, or for a manufacturer or distributor of a separate vehicle component or major vehicle assembly that is warranted independently of the motor vehicle to fail to compensate a dealer anything less than the dealer’s retail rate for the parts or labor the dealer uses in performing the warranty services of the manufacturer or distributor. The dealer’s retail rate for parts must be a percentage determined by dividing the total charges for parts used in warranty like repairs by the dealer’s total cost for those parts minus one (1) in the lesser of one hundred (100) customer paid sequential repair orders or ninety (90) consecutive days of customer paid repair orders. The dealer’s retail rate for labor shall be determined by dividing the total labor sales for warranty like repairs by the number of hours that generated those sales in one hundred (100) customer paid sequential repair orders or ninety (90) consecutive days of customer paid repair orders. A retail rate may be calculated based upon only customer paid repair orders charged within one hundred eighty (180) days before the date the dealer submits the declaration. 

(c) The dealer’s submission for retail rates must include a declaration of the dealer’s retail rates for parts or labor along with the supporting service repair orders paid by customers. A manufacturer or distributor may challenge the dealer’s declaration by submitting a rebuttal not later than sixty (60) days after the date the declaration was received. If the manufacturer or distributor does not send a timely rebuttal to the dealer, the retail rate is established as reasonable and goes into effect automatically. 

(d) If a rebuttal in subsection (c) is timely sent, the rebuttal must substantiate how the dealer’s declaration is unreasonable or materially inaccurate. The rebuttal must propose an adjusted retail rate and provide written support for the proposed adjustments. If the dealer does not agree with the adjusted retail rate, the dealer may file a complaint with the dealer services division within the office of the secretary of state. 

(e) A complaint filed under subsection (d) must be filed not later than thirty (30) days after the dealer receives the manufacturer’s or distributor’s rebuttal. On or before filing a complaint, a dealer must serve a demand for mediation upon the manufacturer or distributor. 

(f) When calculating the retail rate customarily charged by the dealer for parts or labor under this section, the following work may not be included: 

(1) Repairs for manufacturer or distributor special events, specials, or promotional discounts for retail customer repairs. 

(2) Parts sold or repairs performed at wholesale.

 (3) Routine maintenance not covered under a retail customer warranty, such as fluids, filters, and belts not provided in the course of repairs. (4) Nuts, bolts, fasteners, and similar items that do not have an individual part number. 

(5) Vehicle reconditioning. 

(6) Accessories. 

(7) Repairs of damage caused by a collision, a road hazard, the force of the elements, vandalism, or theft. 

(8) Vehicle emission or safety inspections required by law. 

(9) Manufacturer or distributor reimbursed goodwill or policy repairs or replacements. 

(10) Replacement of tires. 

(g) If a manufacturer or distributor furnishes a part or component to a dealer at no cost to use in performing repairs under a recall, campaign service, or warranty repair, the manufacturer or distributor shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this section by compensating the dealer the average markup on the cost for the part or component as listed in the manufacturer’s or distributor’s initial or original price schedule minus the cost for the part or component. 

(h) A manufacturer or distributor may not require a dealer to establish the retail rate customarily charged by the dealer for parts or labor by an unduly burdensome or time consuming method or by requiring information that is unduly burdensome or time consuming to provide, including part by part or transaction by transaction calculations. A dealer may not declare an average percentage parts markup or average labor rate more than once in a twelve (12) month period. A manufacturer or distributor may perform annual audits to verify that a dealer’s effective rates have not decreased. If a dealer’s effective rates have decreased, a manufacturer or distributor may reduce the warranty reimbursement rate prospectively. A dealer may elect to revert to the nonretail rate reimbursement for parts or labor not more than once in a twelve (12) month period. 

(i) Except as provided in IC 9-32-13-16, a manufacturer or distributor may not impose a surcharge on a dealer for the purpose of recovering any of its costs related to the reimbursement of a dealer for parts or labor required under this section. This subsection does not prohibit a manufacturer or distributor from increasing the wholesale price of a vehicle or part in the ordinary course of business.

 (j) If a dealer files a complaint with the dealer services division within the office of the secretary of state, the warranty reimbursement rate in effect before any mediation or complaint remains in effect until thirty (30) days after:

 (1) a final decision has been issued by a court with jurisdiction; and (2) all appeals have been exhausted. As added by P.L.167-2016, SEC.2. Amended by P.L.112-2018, SEC.2. IC 9-32-13-16Contract for uniform warranty reimbursement policy Sec. 16. 

(a) A manufacturer or distributor and at least thirty percent (30%) of its franchisees in Indiana of the same line make may agree in an express written contract citing this section to a uniform warranty reimbursement policy to be used by franchisees for the performance of warranty repairs. The contract must include reimbursement for parts used in warranty repairs or the use of a uniform time standards manual, or both. The allowance for diagnosis within the uniform time standards manual must be reasonable and adequate for the work and service to be performed. The manufacturer or distributor: 

(1) may have only one (1) contract with regard to each line make; and (2) must have a reasonable and fair procedure for franchisees to request a modification or adjustment of a standard included in the uniform time standards manual. (b) A contract described in subsection (a) must meet the following criteria: (1) Establish a uniform parts reimbursement rate that must be greater than the manufacturer’s or distributor’s nationally established parts reimbursement rate in effect at the time the contract becomes effective. A subsequent contract must include a uniform reimbursement rate that is equal to or greater than the rate in the immediately prior contract. 

(2) Apply to all warranty repair orders written while the agreement is in effect.

 (3) At any time during the period the contract is in effect: (A) be available to any franchisee of the same line make as the franchisees that entered into the contract with the manufacturer or distributor; and (B) be available to a franchisee of the same line make on the same terms as apply to the franchisees that entered into the contract with the manufacturer or distributor. 

(4) Be for a term not to exceed three (3) years.

 (5) Allow any party to the uniform warranty reimbursement policy to terminate the policy with thirty (30) days prior written notice to all parties upon the annual anniversary of the policy, if the policy is for at least one (1) year.

 (6) Remain in effect for the entire original period if the manufacturer and at least one (1) franchisee remain parties to the policy. 

(c) A manufacturer or distributor that enters into a contract with its franchisees under subsection (a) may seek to recover only its costs from a franchisee that receives a higher reimbursement rate, if authorized by law, subject to the following: (1) Costs may be recovered only by increasing invoice prices on new motor vehicles received by the franchisee. (2) A manufacturer or distributor may make an exception for motor vehicles that are titled in the name of a purchaser in another state. However, price increases imposed for the purpose of recovering costs imposed by this section may vary from time to time and from model to model and must apply uniformly to all franchisees of the same line make that have requested reimbursement for warranty repairs at a level higher than provided for in the contract. (d) A manufacturer or distributor that enters into a contract with its franchisees under subsection (a) shall do the following: (1) Certify to the secretary under oath, in a writing signed by a representative of the manufacturer or distributor, that at the time the contract was entered into at least thirty percent (30%) of the franchisees of the line make were parties to the contract. (2) File a copy of the contract with the bureau at the time of the certification. (3) Maintain a file that contains the information upon which the certification required under subdivision (1) is based for three (3) years after the certification is made.

IOWA

Sec. 4. Section 322A.5, Code 2018, is amended to read as follows: 322A.5 Warranties and recalls.

1. Every franchiser and franchisee shall fulfill the terms of any express or implied warranty concerning the sale of a motor vehicle to the public of the line-make which is the subject of a contract or franchise agreement between the parties. If it is determined by the district court that either the franchiser or franchisee, or both, have violated an express or implied warranty, the court shall add to any award or relief granted an additional award for reasonable attorney fees and other necessary expenses for maintaining the litigation.

2. a. A franchiser shall specify in writing to each of the franchiser’s franchisees operating in this state the franchisee’s obligations for preparation, delivery, and warranty services related to the franchiser’s products. The franchiser shall compensate the franchisee for the warranty services the franchiser requires the franchisee to provide, including warranty and recall obligations related to repairing and servicing motor vehicles of the franchiser and all parts and components authorized by the manufacturer to be installed in or manufactured for installation in such motor vehicles.

b. The franchiser shall provide to the franchisee a schedule of compensation that specifies reasonable compensation the franchiser will pay to the franchisee for such warranty services, including for parts, labor, and diagnostics.

(1) In determining the schedule of compensation for parts, the franchiser may multiply the price paid by the franchisee for parts, including all shipping costs and other charges, by the sum of one and the franchisee’s average percentage markup. The franchisee’s average percentage markup is calculated by subtracting one from the result of dividing the total amounts charged by the franchisee for parts used in warranty-like repairs by the total cost to the franchisee for the parts in the retail service orders submitted pursuant to subparagraph (3).

(2) In determining the schedule of compensation for labor-related warranty services, the franchiser may calculate the franchisee’s retail labor rate by dividing the total amount of retail sales attributable to labor for warranty-like services by the number of hours of labor spent to generate the retail sales in the retail service orders submitted pursuant to subparagraph (3).

(3) (a) The franchisee may establish its average percentage markup for parts or its labor rate by submitting to the franchiser copies of one hundred sequential retail service orders paid by the franchisee’s customers, or all of the franchisee’s retail service orders paid by the franchisee’s customers in a ninety-day period, whichever is less, for services provided within the previous one-hundred-eighty-day period. The franchiser shall not consider retail service orders or portions of retail service orders attributable to routine maintenance such as tire service or oil service.

(b) Within thirty days of receiving the franchisee’s submission, the franchiser may choose to audit the submitted orders. The franchiser shall then approve or deny the establishment of the franchisee’s average percentage markup or labor rate. If the franchiser approves the establishment of the franchisee’s average percentage markup or labor rate, the markup or rate calculated under this subparagraph shall go into effect forty-five days after the date of the franchiser’s approval. If the franchiser denies the establishment of the franchisee’s average percentage markup or labor rate, the franchisee may file a complaint with the department and a hearing shall be held before the department of inspections and appeals. The franchiser shall have the burden of proof to establish that the franchiser’s denial was reasonable. If the department of inspections and appeals finds the denial was not reasonable, the denial shall be deemed a violation of this chapter and the department of inspections and appeals shall determine the franchisee’s average percentage markup or labor rate for purposes of calculating a reasonable schedule of compensation. In making such a determination, the department of inspections and appeals shall not consider retail service orders or portions of retail service orders attributable to routine maintenance such as tire service or oil service.

(c) A franchiser shall not require a franchisee to establish an average percentage markup or labor rate by a methodology, or by requiring the submission of information, that is unduly burdensome or time-consuming to the franchisee, including but not limited to requiring part-by-part or transaction-by-transaction calculations.

(d) A franchisee shall not request a change in the franchisee’s average percentage markup or labor rate more than once in any one-year period.

(4) The compensation to the franchisee for warranty parts and labor shall not be less than the rates charged by the franchisee for like parts and services to retail customers, provided the rates are reasonable.

3. A franchiser shall not do any of the following: a. Fail to perform any warranty obligation. b. Fail to compensate any of the franchiser’s franchisees operating in this state for repairs relating to a recall.

4. a. A claim made by a franchisee for warranty services pursuant to this section shall be paid within thirty days after the claim’s approval. A franchiser shall either approve or deny a claim within thirty days after the franchiser receives a claim if the claim is submitted on a proper form generally used by the franchiser and the claim contains the information required by the franchiser. If a franchiser does not deny a claim in writing within thirty days after the receipt of the claim, the claim shall be deemed to be approved by the franchiser and payment shall be made to the franchisee within thirty days.

b. A franchiser may deny a franchisee’s claim for compensation for warranty or recall services if the franchisee’s claim is based on a repair not related to warranty or recall services, the repair was not properly performed, the franchisee lacks the reasonably required documentation for the claim, the franchisee fails to comply with the terms and conditions of the franchiser’s warranty or recall compensation program, or the franchiser has a bona fide belief based on factual evidence that the franchisee’s claim was submitted containing an intentionally false or fraudulent statement or misrepresentation. A franchiser may reject, but shall not deny, a claim based solely on a franchisee’s unintentional failure to comply with a specific claim processing requirement, such as a clerical error, that does not otherwise affect the legitimacy of the claim. If a claim is rejected for such a failure, the franchisee may resubmit a corrected claim in a timely manner to the franchiser.

c. The requirement to approve a claim within thirty days or to pay an approved claim within thirty days as provided in this subsection shall not be construed to preclude denials, reductions, or chargebacks not otherwise prohibited under section 322.3, subsection 13.

5. The obligations set forth in this section shall apply to any franchiser as defined in this chapter and any franchiser of new motor vehicle transmissions, engines, or rear axles that separately warrants such components to customers.

KANSAS

8-2415. Correction of warranty defects; compensation to dealer; promotional allowances or
incentive payments; claim for reimbursement from dealer. 

(a) A first or second stage manufacturer ordistributor shall pay reasonable compensation to any authorized new vehicle dealer whoperforms work to rectify
warranty defects in the first or second stage manufacturer’s or distributor’s product.


(b) A first or second stage manufacturer or distributor shall pay any authorized new vehicle dealer all
promotional allowances or other incentive payments submitted by the dealer as provided by the applicable
provisions of such programs subject to the applicable requirements of this act.


(c) In the determination of what constitutes reasonable compensation for warranty work under this act, among
the factors to be considered shall be: The rate or charge which the authorized vehicle dealer in good faith is
charging other customers for the same type of service or repair work, the compensation being paid by other first or
second stage manufacturers or distributors to their vehicle dealers for the same work or service, and the prevailing
wage or labor rate being paid or charged by all vehicle dealers licensed to operate in the city or community in
which said authorized vehicle dealer is doing business.


(d) A first or second stage manufacturer or distributor shall not require unreasonable proof to establish
compensation under this section, nor act unreasonably to delay payments or adjustments in the rate or charge for
particular warranty work, promotional allowances or other incentive payments as circumstances or changes may
justify or require such adjustments. A claim for compensation shall not be divided or the amount to be reimbursed
reduced if the new vehicle dealer has reasonably substantiated the claim. A new vehicle dealer’s failure to comply
with the specific requirements of processing a claim may not constitute grounds for denial of the claim or reduction
of the amount of compensation paid to the dealer if the dealer presents reasonable documentation or other
evidence to substantiate the claim. If the claim is for warranty work, whether or not it includes parts, repairs or
services, then the amount of compensation for the claims shall not be reduced or disallowed on the grounds the
dealer failed to submit the claim fewer than 60 days after the dealer completed the work underlying the claim.


(e) A claim made by a new motor vehicle dealer for compensation under this section shall be either approved
or disapproved within 30 days after the claim is submitted to the first or second stage manufacturer or distributor in
the manner and on the forms the first or second stage manufacturer or distributor reasonably prescribes. An
approved claim shall be paid within 30 days after its approval. If a claim is not specifically disapproved in writing or
by electronic transmission within 30 days after the date on which the first or second stage manufacturer or
distributor receives it, the claim shall be considered to be approved and payment shall follow within 30 days. A first
or second stage manufacturer or distributor retains the right to audit claims for warranty work for a period of one
year after the date on which the claim is paid and to chargeback any amounts paid on claims that are false or
unsubstantiated. A first or second stage manufacturer or distributor retains the right to audit claims for promotional
allowances or other incentive payments submitted by the dealer for a period of one year after the date on which
the claim is paid and to chargeback any amounts paid on claims that are false or unsubstantiated. If there is
evidence of fraud, this subsection does not limit the right of the manufacturer to audit for longer periods and
chargeback for any fraudulent claim, subject to the limitation period under paragraph (3) of subsection (a) of K.S.A.
60-513, and amendments thereto, in addition to any other available remedy. A claim for reimbursement by the first
or second stage manufacturer or distributor of sums due following an audit must be presented to the dealer within
90 days of the audit of the item subject to the claim. A first or second stage manufacturer or distributor may not
setoff or otherwise take control over funds owned, or under the control of the new vehicle dealer, or which are in an
account designated for the new vehicle dealer when such action is based upon the findings of an audit or other
claim with respect thereto until a final decision is issued with respect to any challenge or appeal by either party of
any such audit or claim. This section may be enforced pursuant to K.S.A. 8-2411, and amendments thereto.
History: L. 1980, ch. 36, § 15; L. 1994, ch. 302, § 7; L. 2010, ch. 71, § 5; Apr. 15.

KENTUCKY

190.046 Compensation to dealer for work performed under warranty — “Reasonable compensation” — Submission, determination, and payment of dealer’s claims — Compensation to dealer for sponsored sales or service promotion events — Audits — Fraud.


(1) Notwithstanding the terms of any franchise agreement, each motor vehicle manufacturer or distributor, doing business within this Commonwealth, shall assume all responsibility for and shall defend, indemnify, and hold harmless its motor vehicle dealers against any loss, damages, and expenses, including legal costs, arising out of complaints, claims, recall repairs or modifications or factory authorized or directed repairs, or lawsuits resulting from warranty defects, which shall include structural or production defects; defects in the assembly; or design of motor vehicles, parts, accessories; or other functions beyond the control of the dealer, including without limitation, the selection of parts or components for the vehicle. Each manufacturer or distributor shall pay reasonable compensation to any authorized dealer who performs work to repair defects, or to repair any damage to the manufacturer’s or distributor’s product sustained while the product is in transit to the dealer, when the carrier or the means of transportation is designated by the manufacturer or distributor. Each manufacturer or distributor shall provide to its dealers with each model year a schedule of time allowances for the performance of warranty repair work and services, which shall include time allowances for the diagnosis and performance of warranty work and service time, and shall be reasonable and adequate for the work to be performed.


(2) In the determination of what constitutes “reasonable compensation” under this section, the principal factor to be considered shall be the amount of money that the dealer is charging its other customers for the same type service or repair work. Other factors may be considered, including the compensation being paid by other manufacturers or distributors to their dealers for work; and the prevailing amount of money being paid or charged by the dealers in the city or community in which the authorized dealer is doing business. “Reasonable compensation” shall include diagnosing the defect; repair service; labor; parts and administrative and clerical costs. The compensation of a dealer shall not be less than the amount charged by the dealer for like services and parts, which minimum compensation for parts shall be dealer cost plus thirty percent (30%) gross profit, to retail customers for nonwarranty service and repairs, or less than the amounts indicated for work on the schedule of warranty compensation required to be filed by the manufacturer with the commission as a part of the manufacturer’s license application by KRS 190.030. A manufacturer or distributor shall not require unreasonable proof to establish “reasonable compensation.”


(3) (a) A manufacturer or distributor shall not require a dealer to submit a claim authorized under this section sooner than thirty (30) days after the dealer completes the preparation, delivery, or warranty service authorizing the claim for preparation, delivery, or warranty service.


(b) All claims made by a dealer under this section shall be paid within thirty (30) days after their approval.


(c) All claims shall be either approved or disapproved by the manufacturer or distributor within thirty (30) days after their receipt on a completed form supplied or approved by the manufacturer or distributor.


(d) Any claims not specifically disapproved in writing within thirty (30) days after the receipt of the form shall be considered to be approved and payment shall be made within thirty (30) days thereafter.


(e) A dealer shall not be required to maintain defective parts for more than thirty (30) days after payment of a claim.
(f) Any dispute between the dealer and the manufacturer or distributor shall be subject to the provisions of KRS 190.057.


(4) A manufacturer or distributor shall compensate the dealer for manufacturer-sponsored or distributor-sponsored sales or service promotion events, including but not limited to rebates, programs, or activities in accordance with established written guidelines for such events, programs, or activities, which the manufacturer or distributor shall provide to each dealer.


(5) (a) A manufacturer or distributor shall not require a dealer to submit a claim authorized under subsection (4) of this section sooner than thirty (30) days after the dealer becomes eligible to submit the claim.
(b) All claims made by a dealer pursuant to subsection (4) of this section for promotion events, including but not limited to rebates, programs, or activities, shall be paid within thirty (30) days after their approval.
(c) All claims shall be either approved or disapproved by the manufacturer or distributor within thirty (30) days after their receipt on a completed form supplied or approved by the manufacturer or distributor.
(d) Any claim not specifically disapproved in writing within thirty (30) days after the receipt of this form shall be considered to be approved and payment shall be made within thirty (30) days.


(6) If a dealer submits any claim under this section to a manufacturer or distributor that is incomplete, inaccurate, or lacking any information usually required by the manufacturer or distributor, or if incomplete, inaccurate, or missing information is discovered during an audit, then the manufacturer or distributor shall promptly notify the dealer, and the time limit to submit the claim shall be extended for a reasonable length of time, not less than five (5) business days following notice by the manufacturer or distributor to the dealer, for the dealer to provide the complete, accurate, or lacking information to the manufacturer or distributor. A dealer’s failure to comply with the specific requirements of the manufacturer or distributor for processing a claim may not constitute grounds for denial of the claim or reduction of the amount of compensation paid to the dealer if the dealer presents reasonable documentation or other evidence to substantiate the claim.


(7) (a) A manufacturer or distributor may only audit warranty, sales, or incentive claims for a period of twelve (12) months following payment, or the end of a program which does not exceed one (1) year in length, whichever is later, subject to all of the provisions of this section.


(b) A manufacturer or distributor shall not require documentation for warranty, sales, or incentive claims more than twelve (12) months after the claim was paid or the end of a program which does not exceed one (1) year in length, whichever is later.
(c) Prior to requiring any charge-back, reimbursement, or credit against a future transaction arising out of an audit, the manufacturer or distributor shall submit written notice to the dealer along with a copy of its audit and the detailed reason for each intended charge-back, reimbursement, or credit.
(d) The limitations of this subsection do not apply if the manufacturer or distributor can prove fraud on a claim.
Effective: June 8, 2011
History: Amended 2011 Ky. Acts ch. 3, sec. 1, effective June 8, 2011. — Amended 2000 Ky. Acts ch. 23, sec. 4, effective February 22, 2000. — Amended 1992 Ky. Acts ch. 452, sec. 5, effective July 14, 1992. — Amended 1982 Ky. Acts ch. 373, sec. 7, effective July 15, 1982. — Amended 1978 Ky. Acts ch. 182, sec. 2, effective June 17, 1978. — Amended 1974 Ky. Acts ch. 107, sec. 1. — Created 1972 Ky. Acts ch. 75, sec. 2.

LOUISIANA

190.046 Compensation to dealer for work performed under warranty — “Reasonable compensation” — Submission, determination, and payment of dealer’s claims — Compensation to dealer for sponsored sales or service promotion events — Audits — Fraud.


(1) Notwithstanding the terms of any franchise agreement, each motor vehicle manufacturer or distributor, doing business within this Commonwealth, shall assume all responsibility for and shall defend, indemnify, and hold harmless its motor vehicle dealers against any loss, damages, and expenses, including legal costs, arising out of complaints, claims, recall repairs or modifications or factory authorized or directed repairs, or lawsuits resulting from warranty defects, which shall include structural or production defects; defects in the assembly; or design of motor vehicles, parts, accessories; or other functions beyond the control of the dealer, including without limitation, the selection of parts or components for the vehicle. Each manufacturer or distributor shall pay reasonable compensation to any authorized dealer who performs work to repair defects, or to repair any damage to the manufacturer’s or distributor’s product sustained while the product is in transit to the dealer, when the carrier or the means of transportation is designated by the manufacturer or distributor. Each manufacturer or distributor shall provide to its dealers with each model year a schedule of time allowances for the performance of warranty repair work and services, which shall include time allowances for the diagnosis and performance of warranty work and service time, and shall be reasonable and adequate for the work to be performed.


(2) In the determination of what constitutes “reasonable compensation” under this section, the principal factor to be considered shall be the amount of money that the dealer is charging its other customers for the same type service or repair work. Other factors may be considered, including the compensation being paid by other manufacturers or distributors to their dealers for work; and the prevailing amount of money being paid or charged by the dealers in the city or community in which the authorized dealer is doing business. “Reasonable compensation” shall include diagnosing the defect; repair service; labor; parts and administrative and clerical costs. The compensation of a dealer shall not be less than the amount charged by the dealer for like services and parts, which minimum compensation for parts shall be dealer cost plus thirty percent (30%) gross profit, to retail customers for nonwarranty service and repairs, or less than the amounts indicated for work on the schedule of warranty compensation required to be filed by the manufacturer with the commission as a part of the manufacturer’s license application by KRS 190.030. A manufacturer or distributor shall not require unreasonable proof to establish “reasonable compensation.”


(3) (a) A manufacturer or distributor shall not require a dealer to submit a claim authorized under this section sooner than thirty (30) days after the dealer completes the preparation, delivery, or warranty service authorizing the claim for preparation, delivery, or warranty service.


(b) All claims made by a dealer under this section shall be paid within thirty (30) days after their approval.


(c) All claims shall be either approved or disapproved by the manufacturer or distributor within thirty (30) days after their receipt on a completed form supplied or approved by the manufacturer or distributor.


(d) Any claims not specifically disapproved in writing within thirty (30) days after the receipt of the form shall be considered to be approved and payment shall be made within thirty (30) days thereafter.


(e) A dealer shall not be required to maintain defective parts for more than thirty (30) days after payment of a claim.
(f) Any dispute between the dealer and the manufacturer or distributor shall be subject to the provisions of KRS 190.057.


(4) A manufacturer or distributor shall compensate the dealer for manufacturer-sponsored or distributor-sponsored sales or service promotion events, including but not limited to rebates, programs, or activities in accordance with established written guidelines for such events, programs, or activities, which the manufacturer or distributor shall provide to each dealer.


(5) (a) A manufacturer or distributor shall not require a dealer to submit a claim authorized under subsection (4) of this section sooner than thirty (30) days after the dealer becomes eligible to submit the claim.
(b) All claims made by a dealer pursuant to subsection (4) of this section for promotion events, including but not limited to rebates, programs, or activities, shall be paid within thirty (30) days after their approval.
(c) All claims shall be either approved or disapproved by the manufacturer or distributor within thirty (30) days after their receipt on a completed form supplied or approved by the manufacturer or distributor.
(d) Any claim not specifically disapproved in writing within thirty (30) days after the receipt of this form shall be considered to be approved and payment shall be made within thirty (30) days.


(6) If a dealer submits any claim under this section to a manufacturer or distributor that is incomplete, inaccurate, or lacking any information usually required by the manufacturer or distributor, or if incomplete, inaccurate, or missing information is discovered during an audit, then the manufacturer or distributor shall promptly notify the dealer, and the time limit to submit the claim shall be extended for a reasonable length of time, not less than five (5) business days following notice by the manufacturer or distributor to the dealer, for the dealer to provide the complete, accurate, or lacking information to the manufacturer or distributor. A dealer’s failure to comply with the specific requirements of the manufacturer or distributor for processing a claim may not constitute grounds for denial of the claim or reduction of the amount of compensation paid to the dealer if the dealer presents reasonable documentation or other evidence to substantiate the claim.


(7) (a) A manufacturer or distributor may only audit warranty, sales, or incentive claims for a period of twelve (12) months following payment, or the end of a program which does not exceed one (1) year in length, whichever is later, subject to all of the provisions of this section.


(b) A manufacturer or distributor shall not require documentation for warranty, sales, or incentive claims more than twelve (12) months after the claim was paid or the end of a program which does not exceed one (1) year in length, whichever is later.
(c) Prior to requiring any charge-back, reimbursement, or credit against a future transaction arising out of an audit, the manufacturer or distributor shall submit written notice to the dealer along with a copy of its audit and the detailed reason for each intended charge-back, reimbursement, or credit.
(d) The limitations of this subsection do not apply if the manufacturer or distributor can prove fraud on a claim.
Effective: June 8, 2011
History: Amended 2011 Ky. Acts ch. 3, sec. 1, effective June 8, 2011. — Amended 2000 Ky. Acts ch. 23, sec. 4, effective February 22, 2000. — Amended 1992 Ky. Acts ch. 452, sec. 5, effective July 14, 1992. — Amended 1982 Ky. Acts ch. 373, sec. 7, effective July 15, 1982. — Amended 1978 Ky. Acts ch. 182, sec. 2, effective June 17, 1978. — Amended 1974 Ky. Acts ch. 107, sec. 1. — Created 1972 Ky. Acts ch. 75, sec. 2.

MAINE

Title 10: COMMERCE AND TRADE

Part 3: REGULATION OF TRADE

Chapter 204: BUSINESS PRACTICES BETWEEN MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS AND DEALERS

Subchapter 1: REGULATION OF BUSINESS PRACTICES BETWEEN MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS AND DEALERS

§1176. WARRANTY

If a motor vehicle franchisor requires or permits a motor vehicle franchisee to perform labor or provide parts in satisfaction of a warranty created by the franchisor, the franchisor shall properly and promptly fulfill its warranty obligations, in the case of motor vehicles over 10,000 pounds gross vehicle weight rating, shall adequately and fairly compensate the franchisee for any parts so provided and, in the case of all other motor vehicles, shall reimburse the franchisee for any parts so provided at the retail rate customarily charged by that franchisee for the same parts when not provided in satisfaction of a warranty.

A franchisor may not otherwise recover its costs for reimbursing a franchisee for parts and labor pursuant to this section. For purposes of this section, the retail rate customarily charged by the franchisee for parts may be established by submitting to the franchisor 100 sequential nonwarranty customer-paid service repair orders or 60 days of nonwarranty customer-paid service repair orders, whichever is less in terms of total cost, covering repairs made no more than 180 days before the submission and declaring the average percentage markup. The average percentage markup so declared is the retail rate, which goes into effect 30 days following the declaration, subject to audit of the submitted repair orders by the franchisor and adjustment of the average percentage markup based on that audit. Only retail sales not involving warranty repairs, not involving state inspection, not involving routine maintenance such as changing the oil and oil filter and not involving accessories may be considered in calculating the average percentage markup. A franchisor may not require a franchisee to establish the average percentage markup by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time-consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations.

A franchisee may not change the average percentage markup more than 2 times in one calendar year. Further, the franchisor shall reimburse the franchisee for any labor so performed at the retail rate customarily charged by that franchisee for the same labor when not performed in satisfaction of a warranty; as long as the franchisee’s rate for labor not performed in satisfaction of a warranty is routinely posted in a place conspicuous to its service customer. A franchisor is not required to pay the price charged by the dealer to retail customers for parts of systems, appliances, furnishings, accessories and fixtures of a motor home as defined in Title 29-A, section 101, subsection 40 that are designed, used and maintained primarily for nonvehicular residential purposes.

Any claim made by a franchisee for compensation for parts provided or for reimbursement for labor performed in satisfaction of a warranty must be paid within 60 days of its approval. All the claims must be either approved or disapproved within 60 days of their receipt. A claim may be submitted within 90 days after the performance of services. When a claim is disapproved, the franchisee that submitted the claim must be notified in writing of the claim’s disapproval within that period, together with the specific reasons for its disapproval. A franchisor may not, by agreement, by restriction upon reimbursement, or otherwise, restrict the nature or extent of labor performed or parts provided so that such restriction impairs the franchisee’s ability to satisfy a warranty created by the franchisor by performing labor in a professional manner or by providing parts required in accordance with generally accepted standards. [2003, c. 356, §10 (AMD).]

In any claim that is disapproved by the manufacturer, and the dealer brings legal action to collect the disapproved claim and is successful in the action, the court shall award the dealer the cost of the action together with reasonable attorney fees. Reasonable attorney fees shall be determined by the value of the time reasonably expended by the attorney and not by the amount of the recovery on behalf of the dealer.[1979, c. 498, §3 (NEW).]

It is unlawful for a franchisor, manufacturer, factory branch, distributor branch or subsidiary to own, operate or control, either directly or indirectly, a motor vehicle warranty or service facility located in the State except on an emergency or interim basis or if no qualified applicant has applied for appointment as a dealer in a market previously served by a new motor vehicle dealer of that manufacturer, factory branch, distributor branch or subsidiary’s line make. [1997, c. 521, §25 (NEW).]

A franchisor may not deny those elements of a warranty claim that are based on a dealer’s incidental failure to comply with a claim requirement or a clerical error or other technicality, regardless of whether the franchisor contests any other element of that warranty claim, as long as the dealer corrects any such clerical error or other technicality according to licensee guidelines.

MAINE

TRANSPORTATION TITLE 15. VEHICLE LAWS — LICENSING OF BUSINESSES AND OCCUPATIONS SUBTITLE 2. MANUFACTURERS, DISTRIBUTORS, AND FACTORY BRANCHES
Md. TRANSPORTATION Code Ann. § 15-212

§ 15-212. Refusal, suspension, or revocation of license; other administrative sanctions (a) “Motor home” defined. — In this section, “motor home” means a motor vehicle that:

 (1) Is designed to provide temporary living quarters, built into as an integral part of, or permanently attached to, a self-propelled motor vehicle chassis or van; and (2) Contains permanently installed independent life support systems which provide at least four of the following facilities: 

(i) Cooking; (ii) Refrigeration or ice box; (iii) Self-contained toilet; (iv) Heating, air-conditioning, or both; (v) A potable water supply system including a faucet and sink; (vi) Separate 110-125 volt electrical power supply; or (vii) An LP gas supply. (b) In general. — In addition to the other grounds specified in Subtitle 1 of this title for refusal, suspension, or revocation of a license, the Administration may refuse to grant a license under this subtitle to any person and may suspend, revoke, or refuse to renew the license of any person if it finds that the person has: 

(1) Made any material misrepresentation in transferring a vehicle or truck component part to a dealer or distributor; 

(2) Failed to comply with any written warranty agreement; or 

(3) Failed to reasonably compensate any franchised dealer who does work under:

 (i) The vehicle preparation and delivery obligations of the dealer; or (ii) Any outstanding express or implied new vehicle or truck component parts warranty.


(c) Factors in determining reasonable compensation. — (1) A licensee shall specify in writing to each of its motor vehicle dealers licensed in the State: 

(i) The dealer’s obligation for vehicle preparation, delivery, warranties, and recalls on its products;

(ii) The schedule of compensation to be paid to the dealers for parts, including parts assemblies, and labor, including diagnostic labor and associated administrative requirements, in connection with the service obligations established under item 

(i) of this paragraph; and 

(iii) A time allowance for the performance of labor described in this paragraph that is reasonable and adequate. 

(2) Reasonable compensation under this section may not be less than: 

(i) With respect to labor for warranty or recall repairs, the dealer’s current labor rate for nonwarranty repairs of a like kind for retail customers; and

 (ii) With respect to any part, the dealer’s cost plus its current retail mark-up percentage charged to retail customers for nonwarranty repairs of a like kind. 

(3) (i) For purposes of paragraph (2) of this subsection, the dealer’s labor rate or parts mark-up percentage shall be established by a submission to the licensee of whichever of the following produces fewer repair orders closed, as of the date of submission, within the preceding 180 days: 1. 100 qualifying sequential customer-paid repair orders; or 2. 90 days of qualifying customer-paid repair orders. 

(ii) With respect to parts, a schedule of compensation established under this subsection shall be equal to the parts mark-up percentage as reflected in qualifying repair orders, calculated by dividing the total charges for parts in the repair orders by the total dealer cost for the parts minus one.

 (iii) 1. A dealer may not make a submission under this subsection more than once in 1 year. 2. For purposes of subsubparagraph 1 of this subparagraph, a revision or supplement to a submission to correct or clarify the submission does not constitute a new submission. (4) Repair orders for labor or parts in connection with any of the following may not constitute a qualifying repair order under paragraph (2) of this subsection: 

(i) Accessories; (ii) Repairs for manufacturer, distributor, or factory branch special events, promotions, or service campaigns; (iii) Repairs related to collision; (iv) Vehicle emission or safety inspections required by law;


(v) Parts sold, or repairs performed, at wholesale or for insurance carriers, or other third-party payors;

(vi) Routine maintenance not covered under any warranty, including maintenance involving fluids, filters, and belts not provided in the course of repairs; (vii) Nuts, bolts, fasteners, and similar items that do not have an individual parts number;

 (viii) Tires; (ix) Vehicle reconditioning; 

(x) Goodwill or policy repairs or replacements; or 

(xi) Repairs on vehicles from a different line-make. 

(5) If a licensee gives a dealer a part at no cost to use in performing a repair under a recall, campaign service action, or warranty repair, the licensee shall compensate the dealer for the part by paying the dealer the parts mark-up percentage established under this subsection on the cost for the part listed on the licensee’s price schedule. 

(6) (i) The schedule of compensation submitted under paragraph (3) of this subsection shall be presumed to be accurate and reasonable. (ii) The licensee shall approve or rebut the dealer’s submission within 30 days of receipt. (iii) If the licensee approves a dealer’s submission, the licensee shall begin compensating the dealer under the schedule within 30 days after the date of approval. (iv) In the absence of a timely rebuttal by the licensee, the schedule of compensation submitted by the dealer shall go into effect on the 31st day following the licensee’s receipt of the schedule. (v) Any rebuttal of the schedule of compensation by the licensee shall: 1. Be delivered to the dealer within 30 days of the licensee’s receipt of the schedule; and 2. Consist of reasonable substantiating evidence that the declared rate is materially inaccurate. (vi) In the event of a timely rebuttal, on resolution of the matter by agreement of the parties or by administrative, judicial, or other action, a licensee’s payment obligations under the resulting schedule of compensation shall begin on the 31st day following a final order unless otherwise provided for by the fact finder. (vii) 1. To the extent that any action commenced under subsection (d) of this section or § 15-213 or § 15-214 of this subtitle involves the application of paragraph (3) of this subsection, the issues shall be limited to whether the labor rate or parts mark-up percentage stated in the dealer’s submission was materially inaccurate. 2. A licensee shall have the burden of proving under this subparagraph that the dealer’s submission was materially inaccurate. (viii) 1. A licensee may verify a dealer’s effective rates once annually.
2. If a licensee finds that a dealer’s effective rates have increased or decreased, the licensee may increase or decrease, respectively, the warranty reimbursement rate prospectively. 

(7) A licensee may not directly or indirectly: (i) Calculate its own labor rate or parts mark-up percentage on a warranty reimbursement rate submission by the licensee’s dealer under this section, or require a dealer to calculate a labor rate or parts mark-up percentage, by any method not required under this section, including a method that is unduly burdensome or time-consuming or that requires information that is unduly burdensome or time-consuming to provide such as: 1. A part-by-part or transaction-by-transaction calculation; or 2. Presentation of information as to, or calculations based on, the dealer’s or other dealers’ warranty compensation; (ii) Establish or implement a special part or component number for parts used in warranty fulfillment, if the special part or component number results in reduced compensation for the dealer unless the part is used for specific, limited repair situations; (iii) Require or coerce a dealer to change the prices for which it sells parts or labor for retail customer repairs; (iv) Take adverse action against a dealer because the dealer seeks compensation under this section, by: 1. Implementing a process that is inconsistent with the licensee’s obligations to the dealer under this subtitle; or 2. Failing to act in good faith; (v) Conduct any warranty or retail customer repair audit, or other service-related audit, solely because the dealer makes a request for warranty reimbursement at retail rates in the ordinary course of business; or (vi) Establish, implement, enforce, or apply any policy, standard, rule, program, or incentive regarding the compensation due under this section other than in a uniform manner among the licensee’s dealers in the State.

 (8) The provisions of paragraphs (1) through (7) of this subsection do not apply to travel trailers or parts of systems, fixtures, appliances, furnishings, accessories, and features of motor homes that are not manufactured by the manufacturer of the motor home as a part of the unit. (9) (i) A claim filed under this section by a dealer with a manufacturer or distributor shall be: 1. In the manner and form reasonably prescribed by the manufacturer or distributor; and 2. Approved or disapproved within 30 days of receipt. (ii) A claim not approved or disapproved within 30 days of receipt shall be deemed approved. (iii) Payment of or credit issued on a claim filed under this section shall be made within 30 days ofapproval. 

(10) A dealer’s failure to comply with a specific requirement of the manufacturer or distributor may not constitute grounds for denial of the claim or reduction of the amount of compensation paid to the dealer if the dealer presents documentation or other reasonable evidence to substantiate that the repair and the claim were done according to manufacturer warranty guidelines. (11) (i) If a claim filed under this section is shown by the manufacturer or distributor to be false or unsubstantiated, the manufacturer or distributor may charge back the claim within 9 months from the date the claim was paid or credit issued. (ii) This paragraph does not limit the right of a manufacturer or distributor to: 1. Conduct an audit of any claim filed under this section; or 2. Charge back for any claim that is proven to be fraudulent. (iii) An audit under this paragraph shall be conducted according to generally accepted accounting principles. (d) Fine and damages. — As to any person licensed under this subtitle, instead of or in addition to revocation, suspension, or nonrenewal of a license under this section, the Administrator: (1) May order the licensee to pay a fine not exceeding $ 50,000 for each violation of this subtitle; and (2) May order the licensee to compensate any person for financial injury or other damage suffered as a result of the violation.

MARYLAND

TRANSPORTATION TITLE 15. VEHICLE LAWS — LICENSING OF BUSINESSES AND OCCUPATIONS SUBTITLE 2. MANUFACTURERS, DISTRIBUTORS, AND FACTORY BRANCHES
Md. TRANSPORTATION Code Ann. § 15-212

§ 15-212. Refusal, suspension, or revocation of license; other administrative sanctions (a) “Motor home” defined. — In this section, “motor home” means a motor vehicle that:

 (1) Is designed to provide temporary living quarters, built into as an integral part of, or permanently attached to, a self-propelled motor vehicle chassis or van; and (2) Contains permanently installed independent life support systems which provide at least four of the following facilities: 

(i) Cooking; (ii) Refrigeration or ice box; (iii) Self-contained toilet; (iv) Heating, air-conditioning, or both; (v) A potable water supply system including a faucet and sink; (vi) Separate 110-125 volt electrical power supply; or (vii) An LP gas supply. (b) In general. — In addition to the other grounds specified in Subtitle 1 of this title for refusal, suspension, or revocation of a license, the Administration may refuse to grant a license under this subtitle to any person and may suspend, revoke, or refuse to renew the license of any person if it finds that the person has: 

(1) Made any material misrepresentation in transferring a vehicle or truck component part to a dealer or distributor; 

(2) Failed to comply with any written warranty agreement; or 

(3) Failed to reasonably compensate any franchised dealer who does work under:

 (i) The vehicle preparation and delivery obligations of the dealer; or (ii) Any outstanding express or implied new vehicle or truck component parts warranty.

(c) Factors in determining reasonable compensation. — (1) A licensee shall specify in writing to each of its motor vehicle dealers licensed in the State: 

(i) The dealer’s obligation for vehicle preparation, delivery, warranties, and recalls on its products;

(ii) The schedule of compensation to be paid to the dealers for parts, including parts assemblies, and labor, including diagnostic labor and associated administrative requirements, in connection with the service obligations established under item 

(i) of this paragraph; and 

(iii) A time allowance for the performance of labor described in this paragraph that is reasonable and adequate. 

(2) Reasonable compensation under this section may not be less than: 

(i) With respect to labor for warranty or recall repairs, the dealer’s current labor rate for nonwarranty repairs of a like kind for retail customers; and

 (ii) With respect to any part, the dealer’s cost plus its current retail mark-up percentage charged to retail customers for nonwarranty repairs of a like kind. 

(3) (i) For purposes of paragraph (2) of this subsection, the dealer’s labor rate or parts mark-up percentage shall be established by a submission to the licensee of whichever of the following produces fewer repair orders closed, as of the date of submission, within the preceding 180 days: 1. 100 qualifying sequential customer-paid repair orders; or 2. 90 days of qualifying customer-paid repair orders. 

(ii) With respect to parts, a schedule of compensation established under this subsection shall be equal to the parts mark-up percentage as reflected in qualifying repair orders, calculated by dividing the total charges for parts in the repair orders by the total dealer cost for the parts minus one.

 (iii) 1. A dealer may not make a submission under this subsection more than once in 1 year. 2. For purposes of subsubparagraph 1 of this subparagraph, a revision or supplement to a submission to correct or clarify the submission does not constitute a new submission. (4) Repair orders for labor or parts in connection with any of the following may not constitute a qualifying repair order under paragraph (2) of this subsection: 

(i) Accessories; (ii) Repairs for manufacturer, distributor, or factory branch special events, promotions, or service campaigns; (iii) Repairs related to collision; (iv) Vehicle emission or safety inspections required by law;

(v) Parts sold, or repairs performed, at wholesale or for insurance carriers, or other third-party payors;

(vi) Routine maintenance not covered under any warranty, including maintenance involving fluids, filters, and belts not provided in the course of repairs; (vii) Nuts, bolts, fasteners, and similar items that do not have an individual parts number;

 (viii) Tires; (ix) Vehicle reconditioning; 

(x) Goodwill or policy repairs or replacements; or 

(xi) Repairs on vehicles from a different line-make. 

(5) If a licensee gives a dealer a part at no cost to use in performing a repair under a recall, campaign service action, or warranty repair, the licensee shall compensate the dealer for the part by paying the dealer the parts mark-up percentage established under this subsection on the cost for the part listed on the licensee’s price schedule. 

(6) (i) The schedule of compensation submitted under paragraph (3) of this subsection shall be presumed to be accurate and reasonable. (ii) The licensee shall approve or rebut the dealer’s submission within 30 days of receipt. (iii) If the licensee approves a dealer’s submission, the licensee shall begin compensating the dealer under the schedule within 30 days after the date of approval. (iv) In the absence of a timely rebuttal by the licensee, the schedule of compensation submitted by the dealer shall go into effect on the 31st day following the licensee’s receipt of the schedule. (v) Any rebuttal of the schedule of compensation by the licensee shall: 1. Be delivered to the dealer within 30 days of the licensee’s receipt of the schedule; and 2. Consist of reasonable substantiating evidence that the declared rate is materially inaccurate. (vi) In the event of a timely rebuttal, on resolution of the matter by agreement of the parties or by administrative, judicial, or other action, a licensee’s payment obligations under the resulting schedule of compensation shall begin on the 31st day following a final order unless otherwise provided for by the fact finder. (vii) 1. To the extent that any action commenced under subsection (d) of this section or § 15-213 or § 15-214 of this subtitle involves the application of paragraph (3) of this subsection, the issues shall be limited to whether the labor rate or parts mark-up percentage stated in the dealer’s submission was materially inaccurate. 2. A licensee shall have the burden of proving under this subparagraph that the dealer’s submission was materially inaccurate. (viii) 1. A licensee may verify a dealer’s effective rates once annually.
2. If a licensee finds that a dealer’s effective rates have increased or decreased, the licensee may increase or decrease, respectively, the warranty reimbursement rate prospectively. 

(7) A licensee may not directly or indirectly: (i) Calculate its own labor rate or parts mark-up percentage on a warranty reimbursement rate submission by the licensee’s dealer under this section, or require a dealer to calculate a labor rate or parts mark-up percentage, by any method not required under this section, including a method that is unduly burdensome or time-consuming or that requires information that is unduly burdensome or time-consuming to provide such as: 1. A part-by-part or transaction-by-transaction calculation; or 2. Presentation of information as to, or calculations based on, the dealer’s or other dealers’ warranty compensation; (ii) Establish or implement a special part or component number for parts used in warranty fulfillment, if the special part or component number results in reduced compensation for the dealer unless the part is used for specific, limited repair situations; (iii) Require or coerce a dealer to change the prices for which it sells parts or labor for retail customer repairs; (iv) Take adverse action against a dealer because the dealer seeks compensation under this section, by: 1. Implementing a process that is inconsistent with the licensee’s obligations to the dealer under this subtitle; or 2. Failing to act in good faith; (v) Conduct any warranty or retail customer repair audit, or other service-related audit, solely because the dealer makes a request for warranty reimbursement at retail rates in the ordinary course of business; or (vi) Establish, implement, enforce, or apply any policy, standard, rule, program, or incentive regarding the compensation due under this section other than in a uniform manner among the licensee’s dealers in the State.

 (8) The provisions of paragraphs (1) through (7) of this subsection do not apply to travel trailers or parts of systems, fixtures, appliances, furnishings, accessories, and features of motor homes that are not manufactured by the manufacturer of the motor home as a part of the unit. (9) (i) A claim filed under this section by a dealer with a manufacturer or distributor shall be: 1. In the manner and form reasonably prescribed by the manufacturer or distributor; and 2. Approved or disapproved within 30 days of receipt. (ii) A claim not approved or disapproved within 30 days of receipt shall be deemed approved. (iii) Payment of or credit issued on a claim filed under this section shall be made within 30 days ofapproval. 

(10) A dealer’s failure to comply with a specific requirement of the manufacturer or distributor may not constitute grounds for denial of the claim or reduction of the amount of compensation paid to the dealer if the dealer presents documentation or other reasonable evidence to substantiate that the repair and the claim were done according to manufacturer warranty guidelines. (11) (i) If a claim filed under this section is shown by the manufacturer or distributor to be false or unsubstantiated, the manufacturer or distributor may charge back the claim within 9 months from the date the claim was paid or credit issued. (ii) This paragraph does not limit the right of a manufacturer or distributor to: 1. Conduct an audit of any claim filed under this section; or 2. Charge back for any claim that is proven to be fraudulent. (iii) An audit under this paragraph shall be conducted according to generally accepted accounting principles. (d) Fine and damages. — As to any person licensed under this subtitle, instead of or in addition to revocation, suspension, or nonrenewal of a license under this section, the Administrator: (1) May order the licensee to pay a fine not exceeding $ 50,000 for each violation of this subtitle; and (2) May order the licensee to compensate any person for financial injury or other damage suffered as a result of the violation.

MASSACHUSETTS

(b)(1) A manufacturer or distributor shall specify in writing to each of its dealers the dealer’s obligations for predelivery preparation and warranty service on its products and shall compensate the dealer for such preparation and service. A manufacturer or distributor shall within a reasonable time fulfill its obligations under all express warranty agreements made by it with respect to a product manufactured, distributed or sold by it and shall adequately and fairly compensate any motor vehicle dealer who, under its franchise obligations, furnishes labor, parts and materials under the warranty or maintenance plan, extended warranty, certified preowned warranty or a service contract, issued by the manufacturer or distributor or its common entity, unless issued by a common entity that is not a manufacturer; to fulfill a manufacturer or distributor’s delivery or preparation procedures or to repair a motor vehicle as a result of a manufacturer or distributor’s or common entity’s recall, campaign service, authorized goodwill, directive or bulletin. For the purposes of motor vehicle dealers, fair and adequate compensation shall not be less than the rate and price customarily charged for retail customer repairs and computed under paragraph 

(2); provided, however, that fair and adequate compensation shall, for purposes of this section for powersport vehicles, be computed at the rate normally charged by the motor vehicle dealer to the public for the labor and materials and shall include a fair charge for diagnostic and test services; provided, further, that fair and adequate compensation shall, for purposes of this section for recreational vehicles, be computed at the rate normally charged by the motor vehicle dealer to the public for the labor and shall include a fair charge for diagnostic and test services and shall be computed for the materials at the rate of not less than actual wholesale cost, plus a handling charge of 30 per cent of the cost and the cost, if any, of freight to return the warranty materials to the manufacturer. For the purposes of this subsection, “labor” shall include time spent by employees for diagnosis and repair of a vehicle, “parts” shall include replacement parts and accessories and “retail customer repair” shall mean work, including parts and labor, performed by a dealer which does not come within a manufacturer’s, distributor’s or its common entity’s warranty, extended warranty, certified preowned warranty, service contract or maintenance plan and excludes parts and labor described in clause (iii) of paragraph (2). 

(2)(i) In determining the rate and price customarily charged by the motor vehicle dealer to the public for parts, the compensation may be an agreed percentage markup over the dealer’s cost under a writing separate and distinct from the franchise agreement signed after the dealer’s request, but if an agreement is not reached within 30 days after a dealer’s written request to be compensated under this section, compensation for parts shall be calculated by utilizing the method described in this paragraph. The retail rate customarily charged by the dealer for parts shall be established by the dealer submitting to the manufacturer or distributor 100 sequential nonwarranty or customer-paid service repair orders or 60 consecutive days of nonwarranty, customer-paid service repair orders, whichever is less, each of which includes parts that would normally be used in warranty repairs and covered by the manufacturer’s warranty, covering repairs made not more than 180 days before the submission and declaring the average percentage markup. The average of the markup rates shall be presumed to be fair and reasonable. The retail rate shall go into effect 30 days following the declaration, subject to audit of the submitted repair orders by the franchisor and a rebuttal of the declared rate. If the declared rate is rebutted, the manufacturer or distributor shall propose an adjustment of the average percentage markup based on the rebuttal not later than 30 days after submission. If the dealer does not agree with the proposed average percentage markup, the dealer may file an action in a court of competent jurisdiction not later than 30 days after receipt of the proposal by the manufacturer or distributor. In an action commenced under this paragraph, the manufacturer or distributor shall have the burden of proving that the rate declared by the dealer was inaccurate or unreasonable.

 (ii) The retail rate customarily charged by the dealer for labor may be established by submitting to the manufacturer or distributor 100 sequential nonwarranty, customer-paid service repair orders or 60 consecutive days of nonwarranty, customer-paid service repair orders, whichever is less, covering repair orders made not more than 180 days before the submission and dividing the amount of the dealer’s total labor sales by the number of total labor hours that generated those sales.

The average labor rate shall be presumed to be fair and reasonable. The average labor rate shall go into effect 30 days following the declaration, subject to audit of the submitted repair orders by the franchisor and a rebuttal of the declared rate. If the declared rate is rebutted, the manufacturer or distributor shall propose an adjustment of the average labor rate based on the rebuttal not later than 30 days after submission. If the dealer does not agree with the proposed average labor rate, the dealer may file an action in a court of competent jurisdiction not later than 30 days after receipt of the proposal by the manufacturer or distributor. In any action commenced under this paragraph, the manufacturer or distributor shall have the burden of proving that the rate declared by the dealer was inaccurate or unreasonable.

 (iii) In calculating the retail rate customarily charged by the dealer for parts and labor, the following work shall not be included in the calculation: (a) routine maintenance not covered under any retail customer warranty, such as fluids, filters and belts not provided in the course of repairs; (b) items that do not have an individual part number such as some nuts, bolts, fasteners and similar items; (c) tires; and (d) vehicle reconditioning.

(iv) If a manufacturer or distributor furnishes a part or component to a dealer, at no cost, to use in performing repairs under a recall, campaign service action or warranty repair, the manufacturer or distributor shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this section by compensating the dealer the average markup on the cost for the part or component as listed in the manufacturer’s or distributor’s price schedule less the cost for the part or component.

(v) A manufacturer or distributor shall not require a dealer to establish the retail rate customarily charged by the dealer for parts and labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time consuming to provide including, but not limited to, part-by-part or transaction-by-transaction calculations. A dealer shall not declare an average percentage markup or average labor rate more than once in a calendar year. 

(vi) A manufacturer or distributor shall not establish or implement a special part or component number for parts used in predelivery, dealer preparation, warranty, extended warranty, certified preowned warranty, recall, campaign service, authorized goodwill or maintenance-only applications if it results in lower compensation to the dealer than as calculated in this subsection. 

(vii) A manufacturer or distributor shall not require, influence or attempt to influence a motor vehicle dealer to implement or change the prices for which it sells parts or labor in retail customer repairs. A manufacturer or distributor shall not implement or continue a policy, procedure or program to any of its dealers in the commonwealth for compensation which is inconsistent with this subsection. (3) Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed.

 (4) All claims by dealers under this subsection for labor and parts and all claims for compensation relative to any sales incentive programs shall be paid not later than 30 days after approval by the manufacturer or distributor; provided, however, that manufacturers or distributors shall retain the right to audit such claims and to chargeback the dealer for false or unsubstantiated claims under this section. Dealers shall be required to maintain defective parts for not longer than 90 days following submission of claims. All such claims shall be either approved or disapproved not later than 30 days after their receipt on forms provided by, and in the manner specified by, the manufacturer or distributor. A claim not disapproved in writing or by means of electronic transmission not later than 30 days after receipt shall be considered approved and payment shall be made within 30 days. 

(c) Every manufacturer or distributor shall retain the right to audit claims submitted by a motor vehicle dealer and paid by the manufacturer or distributor for warranty service, parts recall service, and sales incentive, bonus, or other claims relating to the sale of new motor vehicles or services, for 1 year after the date on which a claim is paid or the end of any program period, whichever is later, and to charge back any amounts paid on claims identified in subsections (d) and (e). If there is evidence of fraud or if there has been fraudulent concealment, said manufacturer or distributor shall have a right to audit records for periods exceeding 1 year. 

(d) A warranty service or part recall service claim submitted by a motor vehicle dealer and paid by the manufacturer or distributor may be charged back to the motor vehicle dealer only if the claim was fraudulent or false, the repairs were not properly made or were not necessary to remedy the defective condition, or the motor vehicle dealer failed to comply with the reasonable written requirements of the manufacturer or distributor in effect at the time the claim was presented for payment. 

(e) A sales incentive, bonus or comparable claim relating to the sale of new motor vehicles or services submitted by a motor vehicle dealer and paid by the manufacturer or distributor may be charged back to the motor vehicle dealer only if the claim was fraudulent or false, the sales were not made, the sales were not timely, or the motor vehicle dealer failed to comply with the reasonable written requirements of the manufacturer or distributor in effect at the time that the claim was presented for payment. A manufacturer or distributor shall not chargeback a motor vehicle dealer subsequent to the payment of a claim unless a representative of the manufacturer or distributor first meets in person or by video or teleconference with an officer or employee of the dealer or a dealer-designated representative. The unexcused failure or refusal of a dealer or dealer-designated representative to schedule, attend or participate in a meeting with the manufacturer or distributor to which the dealer or dealer-designated representative consented shall relieve the manufacturer or distributor of any further obligation under this subsection; provided, however, that for the purposes of this subsection, an excused failure or refusal of a dealer or a dealer-designated representative to schedule, attend or participate in a meeting with the manufacturer or distributor shall include, but not be limited to: 

(i) the illness, hospitalization or death of the dealer or the dealer’s designee;

 (ii) the dealer or dealer’s designee attending to an emergency or the death of a family member; 

(iii) the dealer or the dealer’s designee attending to an emergency regarding the dealership; 

(iv) absence caused by military deployment, a weather emergency, an act of God; or 

(v) the dealer or the dealer’s designee attending another dealership-related meeting scheduled by the manufacturer or distributor away from the dealership. At such meeting the manufacturer or distributor shall provide a detailed explanation, with supporting documentation, as to the basis for each of the claims for which the manufacturer or distributor proposed a chargeback to the dealer and a written statement containing the basis upon which the motor vehicle dealer was selected for audit or review. Thereafter, the manufacturer or distributor shall provide the dealer or the dealer’s representative with a reasonable period of time after the meeting within which to respond to the proposed chargebacks, with such period to be commensurate with the volume of claims under consideration, but in no case less than 30 days after the meeting. The manufacturer or distributor shall be prohibited from changing or altering the basis for each of the proposed chargebacks as presented to the dealer or the dealer’s representative following the conclusion of the audit unless the manufacturer or distributor receives new information affecting the basis for any of the chargebacks. If the manufacturer or distributor claims the existence of new information, the dealer shall have the same right to a meeting and right to respond as when the chargeback was originally presented. (f) The persons conducting an audit shall use their best efforts while present at the dealership facility not to unreasonably interfere with the ongoing business of the dealer. All audits shall be completed within a reasonable period of time. 

(g) In conducting an audit or examination, the amount of a discrepancy for any period shall not be determined in whole or in part by extrapolating audit or examination results from a prior or subsequent period without the consent of the dealer.

 (h) The results of each audit or examination shall be compiled in writing and a copy shall be timely provided to the motor vehicle dealer not later than the time that any charge back occurs. The motor vehicle dealer may protest the results of the audit, including the manner in which it was conducted.

 (i) It shall be a violation of subsection (a) of section 3 for any manufacturer or distributor to audit or examine any sales or service account or activity of a motor vehicle dealer as retribution because the motor vehicle dealer exercised any right or remedy under this chapter or exercised any right pursuant to its franchise agreement.

 (j) If a motor vehicle dealer is required to file an incentive payment claim with the manufacturer or distributor, then the motor vehicle dealer may submit any such incentive claim at anytime within 6 months after the date of the retail sale or the end of the program period, whichever is later; but if the incentive program does not require the motor vehicle dealer to file any claim form or take any action other than to report retail sales to the manufacturer or distributor, then the manufacturer or distributor may base the incentive payment upon the sales which the motor vehicle dealer timely and accurately reports, as determined by the reasonable written requirements of the manufacturer or distributor in effect at the time that the sales were made, during the period of the incentive program.

MICHIGAN

445.1577 Dealer’s obligations for preparation, delivery, and warranty service; written
specifications; compensating dealer for required warranty service; schedule of
compensation; prohibited conduct; claims for labor and parts; payment; approval or
disapproval; charge back for false or fraudulent claims; records of warranty repairs;
compensation and claims for promotion events, programs, or activities; approval or
disapproval of claims; meeting; audit.


Sec. 17. (1) Each new motor vehicle manufacturer shall specify in writing to each of its new motor vehicle
dealers licensed in this state the dealer’s obligations for preparation, delivery, and warranty service on its
products. A manufacturer shall compensate a new motor vehicle dealer for warranty service required of the
dealer by the manufacturer. A manufacturer shall provide a new motor vehicle dealer with the schedule of
compensation to be paid to the dealer for parts, work, and service, and the time allowance for the performance
of the work and service.


(2) A schedule of compensation described in subsection (1) shall include reasonable compensation for
diagnostic work and repair service and labor. Time allowances for the diagnosis and performance of warranty
work and service shall be reasonable and adequate for the work to be performed. In determining what
constitutes reasonable compensation under this section, the principal factor to be given consideration is the
prevailing wage rates being paid by dealers in the community in which the dealer is doing business, and the
compensation of a dealer for warranty labor shall not be less than the rates charged by the dealer for like
service to retail customers for nonwarranty service and repairs, if those rates are reasonable.


(3) A manufacturer shall not do any of the following:
(a) Fail to perform any warranty obligation.
(b) Fail to include in written notices of factory recalls to new motor vehicle owners and dealers the
expected date by which necessary parts and equipment will be available to dealers for the correction of the
defects.(c) Fail to compensate a new motor vehicle dealer licensed in this state for repairs made in connection with

the recall.


(4) A manufacturer shall pay a claim made by a new motor vehicle dealer under this section for labor and
parts within 30 days after its approval. A manufacturer shall either approve or disapprove a claim within 30
days after receiving the claim, submitted on the form generally used by the manufacturer and containing the
information usually required in the form. Any claim not specifically disapproved in writing within 30 days
after the manufacturer receives the claim form is considered approved, and the manufacturer shall pay the
claim within 30 days.


(5) Subject to subsection (10), if a manufacturer has approved and paid a new motor vehicle dealer for a
claim, the manufacturer may only charge the claim back to the dealer if 1 of the following is met:
(a) The manufacturer shows that the claim is fraudulent or false. However, the manufacturer may not
charge back the amount paid if the claim is found to be false or fraudulent more than 2 years after payment.
(b) The manufacturer shows that the claim is unsubstantiated, lacks proper documentation, or shows an
improper diagnosis process or improper repair procedures. However, the manufacturer may not charge back
the amount paid if the claim is found to be unsubstantiated, to lack proper documentation, or show an
improper diagnosis process or repair procedures more than 12 months after payment.
(6) A manufacturer may not deny a claim made under this section because of a new motor vehicle dealer’s
incidental failure to comply with a specific claim processing requirement, such as a clerical error, that does
not call into question the legitimacy of the claim.


(7) A new motor vehicle dealer shall maintain all records of warranty repairs, including the related time
records of its employees, for at least 2 years following payment of any warranty claim.
(8) A manufacturer shall compensate a new motor vehicle dealer for any sales or service promotion events,
programs, or activities sponsored by the manufacturer, in accordance with established guidelines for those
events, programs, or activities.


(9) A manufacturer shall pay a claim for compensation owed to a new motor vehicle dealer under
subsection (8) for a promotion event, program, or activity within 10 days after its approval. A manufacturer
shall either approve or disapprove a claim for compensation described in this subsection within 30 days after
receiving the claim, submitted on the form generally used by the manufacturer and containing the information
usually required in the form. Any claim for compensation the manufacturer does not specifically disapprove
Rendered Friday, October 19, 2018 Page 1 Michigan Compiled Laws Complete Through PA 341 of 2018
Ó Legislative Council, State of Michigan Courtesy of www.legislature.mi.gov
in writing within 30 days after receiving the claim form is considered approved, and the manufacturer shall
pay the amount of the claim within 30 days. A manufacturer may only charge back a claim for compensation
within 12 months after the date of payment, or within 12 months after the end of a program if the duration of
the program is 1 year or less.


(10) A manufacturer may not charge a claim back to a new motor vehicle dealer after the claim is paid
unless a representative of the manufacturer first meets in person or by video teleconference or telephone with
an officer or employee of the dealer designated by the new motor vehicle dealer, or responds in writing to any
dealer written request for information. All of the following apply if a meeting is held under this subsection:
(a) At the meeting, the manufacturer shall provide a detailed explanation, with supporting documentation,
of the basis for each proposed chargeback of a claim to the dealer and a written statement containing the basis
on which the claim or claims of the dealer were selected for audit or review by the manufacturer.
(b) After the meeting, the manufacturer shall provide the motor vehicle dealer’s representative a reasonable
period of time of at least 45 days to respond to the proposed chargebacks. The manufacturer shall provide a
longer period of time for the dealer to respond if warranted by the volume of proposed chargebacks.
(c) An unexcused failure or refusal of the dealer or designated officer or employee of the dealer to
schedule, attend, or participate in the meeting with the manufacturer relieves the manufacturer from any
further obligation under this subsection.

 


(11) A manufacturer may conduct an audit of the records of a new motor vehicle dealer relating to a
warranty or promotion claim submitted by a new motor vehicle dealer under this section, but the manufacturer
may only conduct that audit in the time periods allowed for warranty or promotional claim chargebacks under
this section.

445.1577a Reasonable compensation for parts reimbursement and labor rates; factors.

Sec. 17a.

(1) The principal factors in determining what constitutes reasonable compensation for parts reimbursement and labor rates for purposes of section 17(1) are as follows:

(a) The retail price charged for parts by other similarly situated new motor vehicle dealers in a comparable geographic area in this state that offer the same line-make of vehicles.

(b) The retail labor rates of other similarly situated new motor vehicle dealers in a comparable geographic area in this state that offer the same line-make of vehicles.

(2) All of the following apply for purposes of subsection (1):

(a) A new motor vehicle dealer that is demanding warranty compensation from a manufacturer at a rate that exceeds the agreed-upon rates shall establish the retail rate it customarily charges for parts by submitting to the manufacturer 100 consecutive and sequential nonwarranty customer-paid service repair orders that contain repairs for like services or all nonwarranty customer-paid service repair orders covering a period of 90 consecutive days, whichever is less. A dealer shall not submit a service repair order under this subsection that covers repairs made more than 180 days before the date of the submission.

(b) If a manufacturer determines from any set of repair orders submitted under subdivision (a) that the calculated retail markup rate for parts or the retail labor rate is substantially higher or lower than the rate currently on record with the manufacturer, the manufacturer may request additional documentation for a period of either 60 days before or 60 days after the time period for which the repair orders were submitted for purposes of an adjustment.

(c) A new motor vehicle dealer’s retail rate percentage for parts is calculated by determining the dealer’s total parts sales in the submitted repair orders and dividing that amount by the dealer’s total cost for the purchase of those parts, subtracting 1 from that amount, and then multiplying by 100. The manufacturer must approve or disapprove the declared retail rate within 45 days after the date of submission by the dealer. The declared retail rate is effective beginning 30 days after approval by the manufacturer, unless the manufacturer disapproves and timely contests the dealer’s declared rate. If a manufacturer fails to disapprove within 45 days following submission by the dealer, the declared retail rate is considered approved. A new motor vehicle dealer’s retail rate for labor is calculated by determining the dealer’s total labor sales from the submitted repair orders and dividing that amount by the total number of hours that generated those sales. The manufacturer must approve or disapprove the declared retail rate within 45 days after the date the dealer submits the repair orders. The declared retail labor rate is effective beginning 30 days after approval by the manufacturer, unless the manufacturer disapproves and timely contests the dealer’s declared rate.

(d) A manufacturer may contest a new motor vehicle dealer’s declared retail markup rate for parts or retail labor rate not later than 45 days after submission and declaration of the retail markup rate for parts or retail labor rate by the dealer by reasonably substantiating that the rate is inaccurate, incomplete, or unreasonable in light of the factors described in subsection (1). In contesting a new motor vehicle dealer’s declared rate, a manufacturer shall provide a written explanation of the reasons for disagreement with the declared rate. If the declared retail markup rate for parts or retail labor rate is contested, then the manufacturer shall propose an adjustment of the rate. If the manufacturer contests the dealer’s declared parts or labor rate, the parties shall attempt to resolve the dispute through an internal dispute resolution procedure of the manufacturer, if available, provided that the dispute resolution procedure occurs within a reasonable amount of time that does not exceed 45 days after notification of disagreement with the dealer’s declared rate.

(e) If an internal dispute resolution procedure described in subdivision (d) is unsuccessful or does not occur in a timely manner, a new motor vehicle dealer may file a complaint in the circuit court for the county in which the new motor vehicle dealer is located, within 60 days after it receives the adjustment proposed by the manufacturer or within 30 days after conclusion of the internal dispute resolution procedure, whichever is later. In an action under this subdivision, the manufacturer has the burden of proof to demonstrate that the retail markup rate for parts or retail labor rate declared by the dealer is inaccurate, incomplete, or unreasonable.

(3) The following work shall not be considered in calculating the retail rate customarily charged by a new motor vehicle dealer for parts and labor under this section:

(a) Repairs for manufacturer special events, specials, or promotional discounts for retail customer repairs.

(b) Parts sold at wholesale.

(c) Routine maintenance not covered under any retail customer warranty, such as oil changes, fluids, filters, or belts not provided in the course of repairs.

(d) Nuts, bolts, or fasteners or similar items that do not have an individual part number.

(e) Tires, tire repair, tire rotation, or other tire services.

(f) Vehicle reconditioning.

(g) Installation or repair of accessories.

(h) Repairs of vehicle body damage caused by a collision, a road hazard, the force of the elements, vandalism, or theft.

(i) Vehicle emission or safety inspections required by law.

(j) Manufacturer approved and reimbursed goodwill or policy repairs or replacements.

(k) Repairs for which volume discounts have been negotiated with government agencies.

(4) If a manufacturer furnishes a part or component to a new motor vehicle dealer to use in performing repairs under a recall, campaign service action, or warranty repair at no cost to the dealer, the manufacturer shall compensate the dealer for the authorized repair part or component in the same manner as warranty parts compensation under section 17 by paying the dealer the retail rate markup on the cost for the part or component as listed in the price schedule of the manufacturer less the cost for the part or component.

(5) A manufacturer shall not require a new motor vehicle dealer to establish the retail rate customarily charged by the dealer for parts and labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations. A dealer shall not declare a retail rate for parts or labor or both more than once in a calendar year.

(6) A manufacturer shall not limit access to sales or service promotion events, incentives, programs, or activities sponsored by the manufacturer or limit allocation of vehicles or parts to a new motor vehicle dealer based solely on the new motor vehicle dealer’s exercise of its rights under this section. This subsection does not prohibit a manufacturer from increasing the price of a motor vehicle or part in the normal course of business.

MINNESOTA

80E.04 WARRANTY OBLIGATIONS TO DEALERS. Subdivision 

1.Requirements. Each new motor vehicle manufacturer shall specify in writing to each of its new motor vehicle dealers licensed in this state the dealer’s obligations for preparation, delivery, and warranty service on its products. The manufacturer shall also compensate the new motor vehicle dealer for warranty service and parts required of the dealer by the manufacturer, and shall provide the dealer the schedule of compensation to be paid the dealer for parts, work, and service in connection with warranty services, and the time allowance for the performance of the work and service. This section applies to all repair services performed by the dealer for the manufacturer or with the approval of the manufacturer and for which the dealer receives compensation or reimbursement from the manufacturer. Subd.

 2.Reasonable compensation for services. In no event shall the schedule of compensation fail to include reasonable compensation for diagnostic work, as well as repair service, parts, and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. The hourly labor rate paid to and the reimbursement for parts purchased by a dealer for warranty services shall not be less than the rate charged by the dealer for like service to nonwarranty customers for nonwarranty service and repairs. Subd. 

3.Violations. It is a violation of this section for any new motor vehicle manufacturer to fail to: (a) perform any warranty obligations that it undertakes under the motor vehicle manufacturer’s warranty; (b) include in written notices of factory recalls to new motor vehicle owners and dealers the expected date by which necessary parts and equipment will be available to dealers for the correction of the defects; or (c) to compensate any of the motor vehicle dealers licensed in this state for repairs effected by a recall. Subd.

 4.Payment of claims. All claims made by new motor vehicle dealers pursuant to this section for labor and parts shall be paid within 30 days of their approval. Claims shall be either approved or disapproved within 30 days after they are submitted to the manufacturer in the manner and on the forms it prescribes, and any claims not specifically disapproved in writing within 30 days after the manufacturer receives them shall be construed to be approved and payment must follow within 30 days; provided, however, that the manufacturer retains the right to audit the claims for a period of one year and to charge back any amounts paid on claims not reasonably substantiated or fraudulent claims. The audit and charge back provisions of this subdivision also apply to all other incentive and reimbursement programs that are subject to audit by the manufacturer. Subd. 

5.Product liability; limitation. As between the dealer and the manufacturer, the obligations imposed by this section shall constitute the dealer’s only responsibility for product liability based in whole or in part on strict liability in tort.

MISSOURI

61-4-204. Filing agreement — product liability.

 (1) A franchisee shall, at the time of application for a new motor vehicle dealer license under the provisions of 61-4-101, file with the department a certified copy of the franchisee’s written agreement with a manufacturer and a certificate of appointment as dealer or distributor. The certificate of appointment must be signed by an authorized agent of the manufacturer of domestic motor vehicles whenever there is a direct manufacturer dealer agreement or by an authorized agent of the distributor whenever the manufacturer is wholesaling through an appointed distributorship. The certificate must be signed by an authorized agent of the importer of foreign-made vehicles whenever there is a direct importer-dealer agreement or by an authorized agent of the distributor whenever there is an indirect distributor-dealer agreement. The distributor’s certificate of appointment must be signed by an authorized agent of the manufacturer of domestically manufactured motor vehicles or by an authorized agent of the manufacturer or importer of foreign-made motor vehicles. 

(2) A franchisee need not file a written agreement or certificate of appointment if the manufacturer on direct dealerships or distributor on indirect dealerships or importer on direct dealerships uses the identical basic agreement for all its franchised dealers or distributors in this state and certifies in the certificate of appointment that the blanket agreement is on file and the written agreement with the particular dealer or distributor, respectively, is identical with the filed blanket agreement and that the franchisee has filed with the department one agreement together with a list of franchised dealers or distributors. 

(3) A franchisor shall notify the department within 30 days of any revision of or addition to the basic agreement on file or of any franchise supplement to the agreement. Annual renewal of a certificate filed as provided in this section is not required.

 (4) A manufacturer shall file with the department a copy of the delivery and preparation obligations required to be performed by a dealer prior to the delivery of a new motor vehicle to a buyer. These delivery and preparation obligations constitute the dealer’s only responsibility for product liability as between the dealer and the manufacturer. Any mechanical, body, or parts defects arising from an express or implied warranty of the manufacturer constitute the manufacturer’s product or warranty liability only. However, this section may not affect the obligations of new motor vehicle dealers to perform warranty repair and maintenance that may be required by law or contract. Except with regard to household appliances, including but not limited to ranges, refrigerators, and water heaters, in a recreational vehicle and except with regard to a truck rated at more than 10,000 pounds gross vehicle weight, the manufacturer shall compensate an authorized dealer for labor, parts, and other expenses incurred by a dealer who performs work to rectify the manufacturer’s product or warranty defect or for delivery and preparation obligations at the same rate and time the dealer charges to its retail customers for nonwarranty work of a like kind, based upon a published, nationally recognized, retail flat-rate labor time guide manual if the dealer uses the manual as the basis for computing charges for both warranty and retail work. 

(5) (a) All claims made by the dealer pursuant to this section for compensation for delivery, preparation, warranty, and recall service, including labor, parts, and other expenses, and claims made for incentives must be paid by the manufacturer within 30 days of receipt of the claim from the dealer, except that a manufacturer of a motor home shall pay any claim within 60 days of receipt from the dealer. (b) If a claim is disapproved, the dealer must be notified in writing of the grounds for disapproval. A claim that has not been disapproved in writing within 30 days of having been received must be considered approved, and payment is due to the claimant immediately. However, the manufacturer retains the right to audit a claim for a period of 12 months following the payment of the claim. (c) A claim that has been approved and paid may not be charged back to the dealer unless the manufacturer proves that: (i) the claim was false or fraudulent; (ii) the repairs were not properly made; or (iii) the repairs were not necessary to correct the defective condition. (d) A manufacturer may not deny a claim or reduce the amount to be reimbursed to the dealer if the dealer has provided reasonably sufficient documentation demonstrating that the dealer performed the services in compliance with the written policies and procedures of the manufacturer. A manufacturer may not deny a claim based solely on a dealer’s incidental failure to comply with a specific claim processing requirement, such as a clerical error or other administrative technicality that does not put into question the legitimacy of the claim.

(6) Notwithstanding the terms of any agreement, the franchisor may not refuse to allocate, sell, or deliver motor vehicles, may not penalize a dealer, may not charge back or withhold payments or other things of value for which the dealer is otherwise eligible under a sales promotion, program, or contest, and may not prevent the dealer from participating in any promotion, program, or contest based on the dealer’s selling of a motor vehicle to a customer who was present at the dealership and that the dealer did not know or could not have reasonably known that the motor vehicle would be shipped to a foreign country. There is a rebuttable presumption that the dealer did not know or could not have reasonably known that the vehicle would be shipped to a foreign country if the motor vehicle is titled in the United States.

 (7) A franchisor may not recover or seek to recover any of its costs for compensating a dealer for warranty work, including labor and parts, or for the dealer’s participation in incentives by imposing on the dealer any charge or surcharge to the wholesale price paid by the dealer to the franchisor for any product, including motor vehicles and parts. 

(8) A franchisor may reasonably and periodically audit a motor vehicle dealer to determine the validity of paid claims or charge-backs for customer or dealer incentives.

 (9) A dealer has 60 days from the date of notification by a manufacturer of a denial or a charge-back to the dealer to resubmit a claim for payment or compensation if the claim was denied for a dealer’s incidental failure as set forth in subsection (5)(d), regardless of whether the denial or charge-back was a direct or an indirect transaction. 

(10) A dealer has 90 days after the expiration of a franchisor incentive program, or a longer time if provided by the franchise agreement, to submit a claim for payment or compensation under the program. 

(11) Notwithstanding the terms of a franchise agreement or other contract with a dealer and except as provided in subsection (5)(c), after the expiration of 1 year after the date of payment of a motor vehicle claim or 1 year from the end of a program that does not exceed 1 year in length, whichever is later, a franchisor may not: (a) charge back to a dealer, whether directly or indirectly, the amount of a claim that has been approved and paid by the franchisor under an incentive program; (b) charge back to a dealer, whether directly or indirectly, the cash value of a prize or other thing of value awarded to the dealer under an incentive program; or (c) audit the records of a dealer to determine compliance with the terms of an incentive program.

 (12) Subsection (11) does not prohibit a franchisor from making charge-backs to a dealer for fraud at any time as permitted by subsection (5)(c). 

(13) The dealer shall furnish the purchaser of a new motor vehicle with a signed copy of the manufacturer’s delivery and preparation requirements indicating that each of those requirements has been performed. Franchisor’s duties to franchisee–schedule of compensation–claims payment–retail rate calculation–audit authority. 407.828. 

1. Notwithstanding any provision in a franchise to the contrary, each franchisor shall specify in writing to each of its franchisees in this state the franchisee’s obligations for preparation, delivery, and warranty service on its products. The franchisor shall fairly and reasonably compensate the franchisee for preparation, delivery, and warranty service required of the franchisee by the franchisor. The franchisor shall provide the franchisee with the schedule of compensation to be paid to the franchisee for parts, labor, and service, and the time allowance for the performance of the labor and service for the franchisee’s obligations for preparation, delivery, and warranty service. 

2. The schedule of compensation shall include reasonable compensation for diagnostic work, as well as repair service and labor for the franchisee to meet its obligations for preparation, delivery, and warranty service. The schedule shall also include reasonable and adequate time allowances for the diagnosis and performance of preparation, delivery, and warranty service to be performed in a careful and professional manner. In the determination of what constitutes reasonable compensation for labor and service pursuant to this section, the principal factor to be given consideration shall be the prevailing wage rates being charged for similar labor and service by franchisees in the market in which the franchisee is doing business, and in no event shall the compensation of a franchisee for labor and service be less than the rates charged by the franchisee for similar labor and service to retail customers for nonwarranty labor and service, provided that such rates are reasonable. The primary factor in determining a fair and reasonable compensation for parts under this section shall be the prevailing amount charged for similar parts by other same line-make franchisees in the market in which the franchisee is doing business and the fair and reasonable compensation for parts shall not be less than the amount charged by the franchisee for similar parts to retail customers for nonwarranty parts, provided that such rates are reasonable. If another same line-make franchisee is not available within the market, then the prevailing amount charged for similar parts by other franchisees in the market shall be used as the primary factor. 

3. A franchisor shall perform all warranty obligations, including recall notices; include in written notices of franchisor recalls to new motor vehicle owners and franchisees the expected date by which necessary parts and equipment will be available to franchisees for the correction of the defects; and reasonably compensate any of the franchisees in this state for repairs required by the recall. Reasonable compensation for parts, labor, and service shall be determined under subsection 2 of this section. 

4. No franchisor shall require a franchisee to submit a claim authorized under this section sooner than thirty days after the franchisee completes the preparation, delivery, or warranty service authorizing the claim for preparation, delivery, or warranty service. All claims made by a franchisee under this section shall be paid within thirty days after their approval. All claims shall be either approved or disapproved by the franchisor within thirty days after their receipt on a proper form generally used by the franchisor and containing the usually required information therein. Any claims not specifically disapproved in writing within thirty days after the receipt of the form shall be considered to be approved and payment shall be made within fifteen days thereafter. A franchisee shall not be required to maintain defective parts for more than thirty days after submission of a claim. 

5. A franchisor shall compensate the franchisee for franchisor-sponsored sales or service promotion events, including but not limited to, rebates, programs, or activities in accordance with established written guidelines for such events, programs, or activities, which guidelines shall be provided to each franchisee

6. No franchisor shall require a franchisee to submit a claim authorized under subsection 5 of this section sooner than thirty days after the franchisee becomes eligible to submit the claim. All claims made by a franchisee pursuant to subsection 5 of this section for promotion events, including but not limited to rebates, programs, or activities shall be paid within ten days after their approval. All claims shall be either approved or disapproved by the franchisor within thirty days after their receipt on a proper form generally used by the franchisor and containing the usually required information therein. Any claim not specifically disapproved in writing within thirty days after the receipt of this form shall be considered to be approved and payment shall be made within ten days.

 7. In calculating the retail rate customarily charged by the franchisee for parts, service, and labor, the following work shall not be included in the calculation: (1) Repairs for franchisor, manufacturer, or distributor special events, specials, or promotional discounts for retail customer repairs; (2) Parts sold at wholesale; (3) Engine assemblies and transmission assemblies; (4) Routine maintenance not covered under any retail customer warranty, such as fluids, filters, and belts not provided in the course of repairs; (5) Nuts, bolts, fasteners, and similar items that do not have an individual part number; (6) Tires; and (7) Vehicle reconditioning. 8. If a franchisor, manufacturer, importer, or distributor furnishes a part or component to a franchisee, at no cost, to use in performing repairs under a recall, campaign service action, or warranty repair, the franchisor shall compensate the franchisee for the part or component in the same manner as warranty parts compensation under this section by compensating the franchisee at the average markup on the cost for the part or component as listed in the price schedule of the franchisor, manufacturer, importer, or distributor, less the cost for the part or component. 

9. A franchisor shall not require a franchisee to establish the retail rate customarily charged by the franchisee for parts, service, or labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations. A franchisee shall not request a franchisor to approve a different labor rate or parts rate more than twice in one calendar year. 

10. If a franchisee submits any claim under this section to a franchisor that is incomplete, inaccurate, or lacking any information usually required by the franchisor, then the franchisor shall promptly notify the franchisee, and the time limit to submit the claim shall be extended for a reasonable length of time, not less than five business days following notice by the franchisor to the franchisee, for the franchisee to provide the complete, accurate, or lacking information to the franchisor. 

11. (1) A franchisor may only audit warranty, sales, or incentive claims and charge-back to the franchisee unsubstantiated claims for a period of twelve months following payment, subject to all of the provisions of this section. Furthermore, if the franchisor has good cause to believe that a franchisee has submitted fraudulent claims, then the franchisor may only audit suspected fraudulent warranty, sales, or incentive claims and charge-back to the franchisee fraudulent claims for a period of two years following payment, subject to all provisions of this section. (2) A franchisor shall not require documentation for warranty, sales, or incentive claims more than twelve months after the claim was paid. (3) Prior to requiring any charge-back, reimbursement, or credit against a future transaction arising out of an audit, the franchisor shall submit written notice to the franchisee along with a copy of its audit and the detailed reason for each intended charge-back, reimbursement, or credit. A franchisee may file a complaint with the administrative hearing commission within thirty days after receipt of any such written notice challenging such action. If a complaint is filed within the thirty days, then the charge-back, reimbursement, or credit shall be stayed pending a hearing and determination of the matter under section 407.822*. If the administrative hearing commission determines that any portion of the charge-back, reimbursement, or credit is improper, then that portion of the charge-back, reimbursement, or credit shall be void and not allowed.

 

MONTANA

61-4-204. Filing agreement — product liability

(1) A franchisee shall, at the time of application for a new motor vehicle dealer license under the provisions of 61-4-101, file with the department a certified copy of the franchisee’s written agreement with a manufacturer and a certificate of appointment as dealer or distributor. The certificate of appointment must be signed by an authorized agent of the manufacturer of domestic motor vehicles whenever there is a direct manufacturer dealer agreement or by an authorized agent of the distributor whenever the manufacturer is wholesaling through an appointed distributorship. The certificate must be signed by an authorized agent of the importer of foreign-made vehicles whenever there is a direct importer-dealer agreement or by an authorized agent of the distributor whenever there is an indirect distributor-dealer agreement. The distributor’s certificate of appointment must be signed by an authorized agent of the manufacturer of domestically manufactured motor vehicles or by an authorized agent of the manufacturer or importer of foreign-made motor vehicles.


(2) A franchisee need not file a written agreement or certificate of appointment if the manufacturer on direct dealerships or distributor on indirect dealerships or importer on direct dealerships uses the identical basic agreement for all its franchised dealers or distributors in this state and certifies in the certificate of appointment that the blanket agreement is on file and the written agreement with the particular dealer or distributor, respectively, is identical with the filed blanket agreement and that the franchisee has filed with the department one agreement together with a list of franchised dealers or distributors.


(3) A franchisor shall notify the department within 30 days of any revision of or addition to the basic agreement on file or of any franchise supplement to the agreement. Annual renewal of a certificate filed as provided in this section is not required.


(4) A manufacturer shall file with the department a copy of the delivery and preparation obligations required to be performed by a dealer prior to the delivery of a new motor vehicle to a buyer. These delivery and preparation obligations constitute the dealer’s only responsibility for product liability as between the dealer and the manufacturer. Any mechanical, body, or parts defects arising from an express or implied warranty of the manufacturer constitute the manufacturer’s product or warranty liability only. However, this section may not affect the obligations of new motor vehicle dealers to perform warranty repair and maintenance that may be required by law or contract. Except with regard to household appliances, including but not limited to ranges, refrigerators, and water heaters, in a recreational vehicle and except with regard to a truck rated at more than 10,000 pounds gross vehicle weight, the manufacturer shall compensate an authorized dealer for labor, parts, and other expenses incurred by a dealer who performs work to rectify the manufacturer’s product or warranty defect or for delivery and preparation obligations at the same rate and time the dealer charges to its retail customers for nonwarranty work of a like kind, based upon a published, nationally recognized, retail flat-rate labor time guide manual if the dealer uses the manual as the basis for computing charges for both warranty and retail work.


(5) (a) All claims made by the dealer pursuant to this section for compensation for delivery, preparation, warranty, and recall service, including labor, parts, and other expenses, and claims made for incentives must be paid by the manufacturer within 30 days of receipt of the claim from the dealer, except that a manufacturer of a motor home shall pay any claim within 60 days of receipt from the dealer.
(b) If a claim is disapproved, the dealer must be notified in writing of the grounds for disapproval. A claim that has not been disapproved in writing within 30 days of having been received must be considered approved, and payment is due to the claimant immediately. However, the manufacturer retains the right to audit a claim for a period of 12 months following the payment of the claim.


(c) A claim that has been approved and paid may not be charged back to the dealer unless the manufacturer proves that:
(i) the claim was false or fraudulent;
(ii) the repairs were not properly made; or
(iii) the repairs were not necessary to correct the defective condition.
(d) A manufacturer may not deny a claim or reduce the amount to be reimbursed to the dealer if the dealer has provided reasonably sufficient documentation demonstrating that the dealer performed the services in compliance with the written policies and procedures of the manufacturer. A manufacturer may not deny a claim based solely on a dealer’s incidental failure to comply with a specific claim processing requirement, such as a clerical error or other administrative technicality that does not put into question the legitimacy of the claim.


(6) Notwithstanding the terms of any agreement, the franchisor may not refuse to allocate, sell, or deliver motor vehicles, may not penalize a dealer, may not charge back or withhold payments or other things of value for which the dealer is otherwise eligible under a sales promotion, program, or contest, and may not prevent the dealer from participating in any promotion, program, or contest based on the dealer’s selling of a motor vehicle to a customer who was present at the dealership and that the dealer did not know or could not have reasonably known that the motor vehicle would be shipped to a foreign country. There is a rebuttable presumption that the dealer did not know or could not have reasonably known that the vehicle would be shipped to a foreign country if the motor vehicle is titled in the United States.


(7) A franchisor may not recover or seek to recover any of its costs for compensating a dealer for warranty work, including labor and parts, or for the dealer’s participation in incentives by imposing on the dealer any charge or surcharge to the wholesale price paid by the dealer to the franchisor for any product, including motor vehicles and parts.
(8) A franchisor may reasonably and periodically audit a motor vehicle dealer to determine the validity of paid claims or charge-backs for customer or dealer incentives.


(9) A dealer has 60 days from the date of notification by a manufacturer of a denial or a charge-back to the dealer to resubmit a claim for payment or compensation if the claim was denied for a dealer’s incidental failure as set forth in subsection (5)(d), regardless of whether the denial or charge-back was a direct or an indirect transaction.


(10) A dealer has 90 days after the expiration of a franchisor incentive program, or a longer time if provided by the franchise agreement, to submit a claim for payment or compensation under the program.


(11) Notwithstanding the terms of a franchise agreement or other contract with a dealer and except as provided in subsection (5)(c), after the expiration of 1 year after the date of payment of a motor vehicle claim or 1 year from the end of a program that does not exceed 1 year in length, whichever is later, a franchisor may not:
(a) charge back to a dealer, whether directly or indirectly, the amount of a claim that has been approved and paid by the franchisor under an incentive program;
(b) charge back to a dealer, whether directly or indirectly, the cash value of a prize or other thing of value awarded to the dealer under an incentive program; or
(c) audit the records of a dealer to determine compliance with the terms of an incentive program.


(12) Subsection (11) does not prohibit a franchisor from making charge-backs to a dealer for fraud at any time as permitted by subsection (5)(c).


(13) The dealer shall furnish the purchaser of a new motor vehicle with a signed copy of the manufacturer’s delivery and preparation requirements indicating that each of those requirements has been performed.

NEBRASKA

60-1438. Manufacturer or distributor; warranty obligation; prohibited acts. 

(1) Each new motor vehicle manufacturer or distributor shall specify in writing to each of its new motor vehicle dealers licensed in this state the dealer’s obligations for preparation, delivery, and warranty service on its products. The manufacturer or distributor shall compensate the new motor vehicle dealer for warranty service which such manufacturer or distributor requires the dealer to provide, including warranty and recall obligations related to repairing and servicing motor vehicles and all parts and components included in or manufactured for installation in the motor vehicles of the manufacturer or distributor. The manufacturer or distributor shall provide the new motor vehicle dealer with the schedule of compensation to be paid to the dealer for parts, work, and service and the time allowance for the performance of the work and service. 

(2)(a) The schedule of compensation shall include reasonable compensation for diagnostic work, as well as repair service, parts, and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. In the determination of what constitutes reasonable compensation under this section, the principal factors to be given consideration shall be the prevailing wage rates being paid by dealers in the community in which the dealer is doing business, and in no event shall the compensation of the dealer for warranty parts and labor be less than the rates charged by the dealer for like parts and service to retail or fleet customers, as long as such rates are reasonable. In determining prevailing wage rates, the rate of compensation for labor for that portion of repair orders for routine maintenance, such as tire repair or replacement and oil and fluid changes, shall not be used.

(b) For purposes of this section, compensation for parts may be determined by calculating the price paid by the dealer for parts, including all shipping and other charges, multiplied by the sum of one and the dealer’s average percentage markup over the price paid by the dealer for parts purchased by the dealer from the manufacturer and sold at retail. The dealer may establish average percentage markup by submitting to the manufacturer one hundred sequential customer-paid service repair orders or ninety days of customer-paid service repair orders, whichever is less, covering repairs made no more than one hundred eighty days before the submission and declaring what the average percentage markup is. Within thirty days after receipt of the repair orders, the manufacturer may audit the submitted repair orders and approve or deny approval of the average percentage markup based on the audit. The average percentage markup shall go into effect forty-five days after the approval based on that audit. If the manufacturer denies approval of the average percentage markup declared by the dealer, the dealer may file a complaint with the board. The manufacturer shall have the burden to establish that the denial was reasonable. If the board determines that the denial was not reasonable, the denial shall be deemed a violation of the Motor Vehicle Industry Regulation Act subject to the enforcement procedures of the act. Only retail sales not involving warranty repairs or parts supplied for routine vehicle maintenance shall be considered in calculating average percentage markup. No manufacturer shall require a dealer to establish average percentage markup by a methodology, or by requiring information, that is unduly burdensome or time consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations. A dealer shall not request a change in the average percentage markup more than twice in one calendar year. 

(3) A manufacturer or distributor shall not do any of the following: (a) Fail to perform any warranty obligation; (b) Fail to include in written notices of factory recalls to new motor vehicle owners and dealers the expected date by which necessary parts and equipment will be available to dealers for the correction of the defects; or (c) Fail to compensate any of the new motor vehicle dealers licensed in this state for repairs effected by the recall. 

(4) A dealer’s claim for warranty compensation may be denied only if: (a) The dealer’s claim is based on a nonwarranty repair; (b) The dealer lacks documentation for the claim; (c) The dealer fails to comply with specific substantive terms and conditions of the franchisor’s warranty compensation program; or (d) The manufacturer has a bona fide belief based on competent evidence that the dealer’s claim is intentionally false, fraudulent, or misrepresented. 

(5) All claims made by a new motor vehicle dealer pursuant to this section for labor and parts shall be made within six months after completing the work and shall be paid within thirty days after their approval. All claims shall be either approved or disapproved by the manufacturer or distributor within thirty days after their receipt on a proper form generally used by the manufacturer or distributor and containing the usually required information therein. Any claim not specifically disapproved in writing within thirty days after the receipt of the form shall be considered to be approved and payment shall be made within thirty days. The manufacturer has the right to audit the claims for one year after payment, except that if the manufacturer has reasonable cause to believe that a claim submitted by a dealer is intentionally false or fraudulent, the manufacturer has the right to audit the claims for four years after payment. For purposes of this subsection, reasonable cause means a bona fide belief based upon evidence that the issues of fact are such that a person of ordinary caution, prudence, and judgment could believe that a claim was intentionally false or fraudulent. As a result of an audit authorized under this subsection, the manufacturer has the right to charge back to the new motor vehicle dealer the amount of any previously paid claim after the new motor vehicle dealer has had notice and an opportunity to participate in all franchisor internal appeal processes as well as all available legal processes. The requirement to approve and pay the claim within thirty days after receipt of the claim does not preclude chargebacks for any fraudulent claim previously paid. A manufacturer may not deny a claim based solely on a dealer’s incidental failure to comply with a specific claim processing requirement, such as a clerical error that does not put into question the legitimacy of the claim. If a claim is rejected for a clerical error, the dealer may resubmit a corrected claim in a timely manner. 

(6) The warranty obligations set forth in this section shall also apply to any manufacturer of a new motor vehicle transmission, engine, or rear axle that separately warrants its components to customers. (7) This section does not apply to recreational vehicles.

NEVADA

NRS 597.680  Reimbursement by manufacturer for cost of repairs to conform vehicle to express warranties.  The manufacturer shall reimburse its agent or authorized dealer for the cost of repairs made to a motor vehicle to conform it to the manufacturer’s express warranties. The reimbursement must be paid at the rate usually billed by the agent or dealer to the general public for similar repairs. (Added to NRS by 1985, 2026)

NEW HAMPSHIRE

Section 357-C:5 357-C:5 Warranty Obligations, Transportation Damage and Indemnification. – 

I. Every manufacturer, distributor, or branch or division thereof shall fulfill the terms of any express or implied warranty it makes concerning the sale of a new motor vehicle to the public or ultimate purchaser of the line make which is the subject of a contract or franchise agreement. If it is determined by the court in an action at law that the manufacturer has violated its express or implied warranty, the court shall add to any award or relief granted an additional award for reasonable attorney’s fees and other necessary expenses for maintaining the litigation. II. If any franchisor shall require or permit franchisees to perform services or provide parts in satisfaction of a warranty issued by the franchisor: 

(a) The franchisor shall specify in writing to each of its new motor vehicle dealers in this state, the dealers’ obligations for warranty service on its products, shall compensate the new motor vehicle dealer for warranty service required of the dealer by the manufacturer, and shall provide the dealer the schedule of compensation to be paid such dealer for parts, work and service in connection with warranty services, and the time allowance for the performance of such work and service. Warranty service on trucks and equipment, except for those sold by a single line equipment dealer, shall include the cost, including labor, to transport a motor vehicle under warranty in order to perform the warranty work and to return the motor vehicle to the customer, or, if transporting the trucks and equipment to the dealership is not mechanically or financially feasible, to travel to and return from the locations of the motor vehicle if the warranty repairs are performed at the location of the motor vehicle; provided that reimbursement for travel time shall not exceed 4 hours. 

(b)(1) In no event shall a schedule of compensation for parts, work, and service in connection with warranty services fail to include reasonable compensation for diagnostic work, as well as parts, repair service and labor under the warranty or maintenance plan, extended warranty, certified preowned warranty or a service contract, issued by the manufacturer or distributor or its common entity. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. In no event shall any manufacturer, component manufacturer, or distributor pay its dealers an amount of money for warranty work that is less than that charged by the dealer to the retail customers of the dealer for non-warranty work of like kind. In accordance with RSA 382-A:2-329, the manufacturer shall reimburse the franchisee for any parts so provided at the retail rate customarily charged by that franchisee for the same parts when not provided in satisfaction of a warranty and computed under this subparagraph. No claim which has been approved and paid by the manufacturer or distributor may be charged back to the dealer unless it can be shown that the claim was false or fraudulent, that the repairs were not properly made or were unnecessary to correct the defective condition, or that the dealer failed to reasonably substantiate that the claim was in accordance with the written requirements of the manufacturer or distributor in effect at the time the claim arose. A manufacturer or distributor shall not deny a claim solely based on a dealer’s incidental failure to comply with a specific claim processing requirement, or a clerical error, or other administrative technicality. 

(A) The obligations imposed on motor vehicle franchisors by this section shall apply to any parent, subsidiary, affiliate, or agent of the motor vehicle franchisor if a warranty or service or repair plan is issued by that person instead of or in addition to one issued by the motor vehicle franchisor. (B)(i) In determining the rate and price customarily charged by the motor vehicle dealer to the public for parts, the compensation may be an agreed percentage markup over the dealer’s cost under a writing separate and distinct from the franchise agreement signed after the dealer’s request, but if an agreement is not reached within 30 days after a dealer’s written request to be compensated under this section, compensation for parts shall be calculated by utilizing the method described in this paragraph. (ii) If the dealer and the manufacturer are unable to agree to a percentage markup as provided by subparagraph (i), the retail rate customarily charged by the dealer for parts that the manufacturer is obligated to pay pursuant to RSA 382-A:2-329, shall be established by the dealer submitting to the manufacturer or distributor 100 sequential nonwarranty or customer-paid service repair orders or 90 consecutive days of nonwarranty, customer-paid service repair orders, whichever is less, each of which includes parts that would normally be used in warranty repairs and covered by the manufacturer’s warranty, covering repairs made not more than 180 days before the submission and declaring the average percentage markup. 

The retail rate so declared must be reasonable as compared to other same line-make dealers of similar size in the immediate geographic vicinity of the dealer or, if none exist, immediately outside the dealer’s geographic relevant market area within this state. The declared retail rate shall go into effect 30 days following the date on which the dealer submitted to the manufacturer or distributor the required number of nonwarranty or customer-paid service repair orders (hereafter referred to as the “submission date”) subject to audit of the submitted nonwarranty or customer-paid service repair orders by the manufacturer or distributor and a rebuttal of the declared retail rate. If the manufacturer or distributor wishes to rebut the declared retail rate it must so inform the dealer not later than 30 days after the submission date and propose an adjustment of the average percentage markup based on the rebuttal not later than 60 days after the submission date. If the dealer does not agree with the proposed average percentage markup, the dealer may file a protest at the motor vehicle industry board not later than 90 days after the submission date. In the event a protest is filed, the manufacturer has the burden of proof to establish that the dealer’s submission is unreasonable as compared to other same line-make dealers of similar size in the immediate geographic vicinity of the dealer or, if none exist, immediately outside the dealer’s geographic relevant market area within this state. In the event a dealer prevails in a protest filed under this provision, the dealer’s increased parts and/or labor reimbursement shall be provided retroactive to the date the submission would have been effective pursuant to the terms of this section but for the manufacturer’s denial. 

(iii) In calculating the retail rate customarily charged by the dealer for parts, the following work shall not be included in the calculation: routine maintenance not covered under any retail customer warranty, such as fluids, filters and belts not provided in the course of repairs; items that do not have an individual part number such as some nuts, bolts, fasteners and similar items; tires; vehicle reconditioning; parts covered by subparagraph 

(v); repairs for manufacturer special events and manufacturer discounted service campaigns; parts sold at wholesale or parts used in repairs of government agencies’ repairs for which volume discounts have been negotiated by the manufacturer; promotional discounts on behalf of the manufacturer, internal billings, regardless of whether the billing is on an in-stock vehicle; and goodwill or policy adjustments. 

(iv) A manufacturer or distributor shall not require a dealer to establish the retail rate customarily charged by the dealer for parts and labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time consuming to provide including, but not limited to, part-by-part or transaction-by-transaction calculations. A dealer shall not declare an average percentage markup or average labor rate more than once in a calendar year. A manufacturer or distributor may perform annual audits to verify that a dealer’s effective rates have not decreased and if they have may reduce the warranty reimbursement rate prospectively. Such audits shall not be performed more than once per calendar year at any dealer. The audit performed by the manufacturer shall be in accordance with the method to calculate the retail rate customarily charged by the dealer for parts as set out in subparagraph (ii) above and subject to the limitations in subparagraph (iii). If the dealer does not agree with the proposed average percentage markup, the dealer may file a protest at the motor vehicle industry board not later than 90 days after the manufacturer states the intended new retail rate as the result of the manufacturer’s audit. In the event a protest is filed, the manufacturer has the burden of proof to establish that the proposed retail rate was calculated accurately and in accordance with this subparagraph. The proposed retail rate shall not be effective until the motor vehicle industry board issues a final order approving the proposed rate. If as the result of the audit performed in accordance with subparagraph (ii) the calculation shows that the dealer’s average percentage markup is greater than the average percentage markup currently being used for the dealer’s retail rate reimbursement, the dealer’s average percentage markup shall be increased to the extent of the result of the audit. Any rate that is adjusted as a result of an audit performed in accordance with this subparagraph shall not be adjusted again until a period of 6 months from the effective date of the change has lapsed. 

(v) If a motor vehicle franchisor or component manufacturer supplies a part or parts for use in a repair rendered under a warranty other than by sale of that part or parts to the motor vehicle franchisee, the motor vehicle franchisee shall be entitled to compensation equivalent to the motor vehicle franchisee’s average percentage markup on the part or parts, as if the part or parts had been sold to the motor vehicle franchisee by the motor vehicle franchisor. 

(1) The requirements of this subparagraph shall not apply to entire engine assemblies, entire transmission assemblies, in-floor heating systems, and rear-drive axles (“assemblies”). In the case of assemblies, the motor vehicle franchisor shall reimburse the motor vehicle franchisee in the amount of 30 percent of what the motor vehicle franchisee would have paid the motor vehicle franchisor for the assembly if the assembly had not been supplied by the franchisor other than by the sale of that assembly to the motor vehicle franchisee.

 (2) The requirements of this subparagraph shall not apply to household appliances, furnishings, and generators of a motor home (“household items”). In the case of household items valued under $600, the motor vehicle franchisor shall reimburse the motor vehicle franchisee in the amount of 30 percent of what the motor vehicle franchisee would have paid the motor vehicle franchisor for the household item if the household item had not been supplied by the franchisor other than by the sale of that assembly to the motor vehicle franchisee. For household items in excess of $600, the markup would be capped as if the part were $600. The motor vehicle franchisor shall also reimburse the franchisee for any freight costs incurred to return the removed parts. (vi) A manufacturer or distributor may not otherwise recover its costs for reimbursing a franchisee for parts and labor pursuant to this section. (2) In no event shall a manufacturer or component manufacturer fail to pay a dealer reasonable compensation for parts or components, including assemblies, used in warranty or recall repairs. 

(3) The wholesale price on which a dealer’s markup reimbursement is based for any parts used in a recall, service campaign, or other similar program, shall not be less than the highest wholesale price listed in the manufacturer’s or distributor’s wholesale price catalogue within 6 months prior to the start of the recall, service campaign, or other similar program. If the manufacturer or distributor does not have a wholesale price catalogue, or if the part is not listed in a wholesale price catalogue, the wholesale price on which a dealer’s markup reimbursement is based in a recall, service campaign, or other similar program shall be the average price charged to dealers of similar line makes in the state for the part during 6 months prior to the start of the recall, service campaign, or other similar program. In no event shall a dealer receive less than the dealer’s actual cost for that part, plus the markup as calculated pursuant to this subparagraph. (c) No new motor vehicle manufacturer shall fail to perform any warranty obligations, including tires, whether or not such tires placed on the new motor vehicle by the manufacturer are excluded under the motor vehicle manufacturer’s warranty; fail to include in written notices of factory recalls to new motor vehicle owners and dealers the expected date by which necessary parts and equipment will be available to dealers for the correction of such defects; or fail to compensate any of the new motor vehicle dealers in this state for repairs effected by such recall. (d)(1) All claims made by new motor vehicle dealers pursuant to this section for labor and parts shall be paid within 30 days following their approval. All such claims shall be either approved and paid or disapproved within 30 days after their receipt, and any claim not specifically disapproved in writing within such period shall be deemed approved. Notice of rejection of any claim shall be accompanied by a specific statement of the grounds on which the rejection is based. 

(2) A manufacturer, distributor, branch, or division shall retain the right to audit warranty claims for a period of 9 months after the date on which the claim is paid and charge back any amounts paid on claims that are false or unsubstantiated. (3) A manufacturer, distributor, branch, or division shall retain the right to audit all incentive and reimbursement programs for a period of 9 months after the date on which the claim is paid or 9 months from the end of a program that does not exceed one year, whichever is later, and charge back any amounts paid on claims that are false or unsubstantiated. 

(4) Any new motor vehicle dealer who is audited by a manufacturer, distributor, branch, or division shall have the right to be present or represented by counsel or other designated representative. 

(5) Any chargeback resulting from any audit shall not be made until a final order is issued by the New Hampshire motor vehicle industry board if a protest to the proposed chargeback is filed within 30 days of the notification of the final amount claimed by the manufacturer, distributor, branch, or division to be due after exhausting any procedure established by the manufacturer, distributor, branch, or division to contest the chargeback, other than arbitration. If the chargeback is affirmed by a final order of the board, the dealer shall be liable for interest on the amount set forth in the order at a rate of the prime rate effective on the date of the order plus one percent per annum from the date of the filing of the protest. In the absence of fraud, the board may order, based on the equities and circumstances of the parties, that the chargeback plus applicable interest be paid in installments not exceeding 12 months. If the board finds that a warranty chargeback is the result of a fraudulent warranty claim, no installment payments shall be allowed by the board. (6) A manufacturer, distributor, branch, or division shall retain the right to charge back a fraudulent warranty claim, subject to any limitation period established in the franchise agreement but in no event longer than the limitation period provided in RSA 508:4, I. The applicable limitation period shall commence on the date a fraudulent warranty claim is paid. 

(7) If the franchise agreement between a manufacturer, distributor, branch, or division is terminated for any reason, any audit pursuant to this section shall be completed no later than 30 days after the effective date of the termination. 

(8) Notwithstanding the terms of any franchise or agreement, a manufacturer, distributor, branch, or division shall not take or threaten to take any adverse action against a motor vehicle dealer, including charge backs, reducing vehicle allocations, or terminating or threatening to terminate a franchise or agreement because the dealer sold or leased a motor vehicle to a customer who exported the vehicle to a foreign country, unless the motor vehicle dealer knew or reasonably should have known that the customer intended to export the vehicle. There shall be a presumption that the motor vehicle dealer did not know or could not have reasonably known if the vehicle is titled or registered in any state in this country. 

(e) The franchisor shall not in any way restrict the nature or extent of services to be rendered or parts to be provided so that such restriction prevents the franchisee from satisfying a warranty in a workmanlike manner with all required or necessary parts. III. 

(a) Notwithstanding the terms, provisions, or conditions of any agreement or franchise, a new motor vehicle dealer shall be solely liable for damages to new motor vehicles after acceptance from the carrier and before delivery to the ultimate purchaser. 

(b) Notwithstanding the terms, provisions, or conditions of any agreement or franchise, a manufacturer shall be liable for all damages to motor vehicles before delivery to a carrier or transporter. 

(c) A new motor vehicle dealer shall be liable for damages to new motor vehicles after delivery to the carrier only if the dealer selects the method of transportation, mode of transportation, and the carrier; in all other instances, the manufacturer shall be liable for carrier-related new motor vehicle damage. 

(d) On any new motor vehicle, any uncorrected damage or any corrected damage exceeding 6 percent of the manufacturer’s suggested retail price, as defined in 15 U.S.C.A. sections 1231-33, as measured by retail repair costs, shall be disclosed in writing by the manufacturer or distributor to the dealer and shall be disclosed in writing by the dealer to the ultimate purchaser prior to delivery. Damage to glass, tires, and bumpers shall be excluded from the calculation required in this subparagraph when replaced by identical manufacturer’s original equipment. 

(e) Repaired damage to a customer-ordered new motor vehicle less than the amount requiring disclosure in subparagraph (d) shall not constitute grounds for revocation of the customer order. The customer’s right of revocation shall cease upon his acceptance of delivery of the vehicle, provided disclosure is made prior to delivery. 

(f) If damage to a vehicle exceeds the amount requiring disclosure in subparagraph (d) at either the time the new motor vehicle is accepted by the new motor vehicle dealer, or whenever the risk of loss is shifted to the dealer, whichever occurs first, then the dealer may reject the vehicle within a reasonable time. 

(g) If a new motor vehicle dealer determines the method of transportation, as defined in subparagraph (c), then the risk of loss during transit shall pass to the dealer upon delivery of the vehicle to the carrier. In every other instance, the risk of loss shall remain with the manufacturer until such time as the new motor vehicle dealer accepts the vehicle from the carrier. IV. (a) A franchisor shall indemnify its franchisees from any and all reasonable claims, losses, damages, and costs, including attorney’s fees resulting from or related to complaints, claims or suits against the franchisee by third parties, including but not limited to those based upon strict liability, negligence, misrepresentation, warranty and revocation of acceptance or rescission, where an action alleges fault due to: 

(1) the manufacture, assembly, or design of the vehicle, parts, or accessories, or the selection or combination of parts or components; (2) service systems, procedures or methods required, recommended or suggested to the franchisee by the franchisor; or (3) damage to the vehicle in transit to the franchisee where the carrier is designated by the manufacturer. 

(b) The franchisor shall not be liable to the franchisee by virtue of this section for any claims, losses, costs or damages arising as a result of negligence or willful malfeasance by the franchisee in its performance of delivery, preparation, or warranty obligations required by the franchisor, or other services performed; provided, however, that the franchisor shall be liable for damages arising from or in connection with any services rendered by a franchisee in accordance with any service, system, procedure or method suggested or required by the franchisor. (c) In any action where there are both allegations for which the franchisor is required to indemnify the franchisee and claims of negligence in the performance of services by the franchisee, the percentage of fault of each shall be determined and the franchisor’s duty to indemnify the franchisee against all damages and expenses, including attorney’s fees, shall be limited to that percentage of fault found to be of the type set forth in subparagraph (a).

NEW JERSEY

56:10-15 Reimbursement for services or parts under warranty or law.

3.If any motor vehicle franchise shall require or permit motor vehicle franchisees to perform services or provide parts in satisfaction of a warranty issued by the motor vehicle franchisor:

a.The motor vehicle franchisor shall reimburse each motor vehicle franchisee for such services as are rendered and for such parts as are supplied, in an amount equal to the prevailing retail price charged by such motor vehicle franchisee for such services and parts in circumstances where such services are rendered or such parts supplied other than pursuant to warranty; provided that such motor vehicle franchisee’s prevailing retail price is not unreasonable when compared with that of the holders of motor vehicle franchises from the same motor vehicle franchisor for identical merchandise or services in the geographic area in which the motor vehicle franchisee is engaged in business.

b.The motor vehicle franchisor shall not by agreement, by restrictions upon reimbursement, or otherwise, restrict the nature and extent of services to be rendered or parts to be provided so that such restriction prevents the motor vehicle franchisee from satisfying the warranty by rendering services in a good and workmanlike manner and providing parts which are required in accordance with generally accepted standards. Any such restriction shall constitute a prohibited practice hereunder.

c.The motor vehicle franchisor shall reimburse the motor vehicle franchisee pursuant to subsection a. of this section, without deduction, for services performed on, and parts supplied for, a motor vehicle by the motor vehicle franchisee in good faith and in accordance with generally accepted standards, notwithstanding any requirement that the motor vehicle franchisor accept the return of the motor vehicle or make payment to a consumer with respect to the motor vehicle pursuant to the provisions of P.L.1988, c.123 (C.56:12-29 et seq.).

d.For the purposes of this section, the “prevailing retail price” charged by a motor vehicle franchisee for parts means the price paid by the motor vehicle franchisee for those parts, including all shipping and other charges, multiplied by the sum of 1.0 and the franchisee’s average percentage markup over the price paid by the motor vehicle franchisee for parts purchased by the motor vehicle franchisee from the motor vehicle franchisor and sold at retail. The motor vehicle franchisee may establish average percentage markup under this section by submitting to the motor vehicle franchisor 100 sequential customer paid service repair orders or 90 days of customer paid service repair orders, whichever is less, covering repairs made no more than 180 days before the submission, and declaring what the average percentage markup is. The average percentage markup so declared shall go into effect 30 days following the declaration subject to audit of the submitted repair orders by the motor vehicle franchisor and adjustment of the average percentage markup based on that audit. Only retail sales not involving warranty repairs, parts covered by subsection e. of this section, or parts supplied for routine vehicle maintenance, shall be considered in calculating average percentage markup. No motor vehicle franchisor shall require a motor vehicle franchisee to establish average percentage markup by a methodology, or by requiring information, that is unduly burdensome or time consuming to provide, including, but not limited to, part by part or transaction by transaction calculations. A motor vehicle franchisee shall not request a change in the average percentage markup more than twice in one calendar year.

e.If a motor vehicle franchisor supplies a part or parts for use in a repair rendered under a warranty other than by sale of that part or parts to the motor vehicle franchisee, the motor vehicle franchisee shall be entitled to compensation equivalent to the motor vehicle franchisee’s average percentage markup on the part or parts, as if the part or parts had been sold to the motor vehicle franchisee by the motor vehicle franchisor. The requirements of this section shall not apply to entire engine assemblies and entire transmission assemblies. In the case of those assemblies, the motor vehicle franchisor shall reimburse the motor vehicle franchisee in the amount of 30% of what the motor vehicle franchisee would have paid the motor vehicle franchisor for the assembly if the assembly had not been supplied by the franchisor other than by the sale of that assembly to the motor vehicle franchisee.

f.The motor vehicle franchisor shall reimburse the motor vehicle franchisee for parts supplied and services rendered under a warranty within 30 days after approval of a claim for reimbursement. All claims for reimbursement shall be approved or disapproved within 30 days after receipt of the claim by the motor vehicle franchisor. When a claim is disapproved, the motor vehicle franchisee shall be notified in writing of the grounds for the disapproval. No claim that has been approved and paid shall be charged back to the motor vehicle franchisee unless it can be shown that the claim was false or fraudulent, that the services were not properly performed, that the parts or services were unnecessary to correct the defective condition, or that the motor vehicle franchisee failed to reasonably substantiate the claim in accordance with reasonable written requirements of the motor vehicle franchisor, provided that the motor vehicle franchisee had been notified of the requirements prior to the time the claim arose and the requirements were in effect at the time the claim arose. A motor vehicle franchisor shall not audit a claim after the expiration of two years following the payment of the claim unless the motor vehicle franchisor has reasonable grounds to believe that the claim was fraudulent.

g.The obligations imposed on motor vehicle franchisors by this section shall apply to any parent, subsidiary, affiliate or agent of the motor vehicle franchisor, any person under common ownership or control, any employee of the motor vehicle franchisor and any person holding 1% or more of the shares of any class of securities or other ownership interest in the motor vehicle franchisor, if a warranty or service or repair plan is issued by that person instead of or in addition to one issued by the motor vehicle franchisor.

h.The provisions of this section shall also apply to franchisor administered service and repair plans:

(1)if the motor vehicle franchisee offers for sale only the franchisor administered service or repair plan; or

(2)if the motor vehicle franchisee is paid its prevailing retail price for all service or repair plans the motor vehicle franchisee offers for sale to purchasers of new motor vehicles; or

(3)for the first 36,000 miles of coverage under the franchisor administered service or repair plan, if the warranty offered by the motor vehicle franchisor on the motor vehicle provides coverage for less than 36,000 miles; or

(4)for motor vehicles covered by a franchisor administered service or repair plan, if the motor vehicle franchisee does not offer for sale the franchisor administered service or repair plan.

With respect to franchisor administered service or repair plans covering only routine maintenance service, this section applies only to those plans sold to customers on or after the effective date of P.L.1999, c.45.

L.1977,c.84,s.3; amended 1991, c.459, s.7; 1999, c.45, s.3.

NEW MEXICO

“57-16-7. WARRANTY CLAIMS–PAYMENT.– 

A. Each manufacturer shall specify in its franchise agreement, or in a separate written agreement, with each of its dealers licensed in this state, the dealer’s obligation to perform warranty work or service on the manufacturer’s products. Each manufacturer shall provide each of its dealers with a schedule of compensation to be paid to the dealer for any warranty work or service, including parts, labor and diagnostic work, required of the dealer by the manufacturer in connection with the manufacturer’s products. The schedule of compensation for a warranty claim shall not be less than the rates charged by the dealer for similar service to retail customers for nonwarranty service and repairs and shall not be less than the schedule of compensation for an existing dealer as of July 1, 2011. B. 

The rates charged by the dealer for nonwarranty service or work for parts means the price paid by the dealer for those parts, including all shipping and other charges, increased by the franchisee’s average percentage markup. A dealer shall establish and declare the dealer’s average percentage markup by submitting to the manufacturer one hundred sequential customer-paid service repair orders or ninety days of customer-paid service repair orders, whichever is less, covering repairs made no more than one hundred eighty days before the submission. A change in a dealer’s established average percentage markup takes effect thirty days following the submission.

 A manufacturer shall not require a dealer to establish average percentage markup by another methodology. A manufacturer shall not require information that the dealer believes is unduly burdensome or time-consuming to provide, including, but not limited to, part-by-part or transaction-by- transaction calculations. C. A manufacturer shall compensate a dealer for labor and diagnostic work at the rates charged by the dealer to its retail customers for such work. If a manufacturer can demonstrate that the rates unreasonably exceed those of all other franchised motor vehicle dealers in the same relevant market area offering the same or a competitive motor vehicle line, the manufacturer is not required to honor the rate increase proposed by the dealer. If the manufacturer is not required to honor the rate increase proposed by the dealer, the dealer is entitled to resubmit a new proposed rate for labor and diagnostic work. D. A dealer shall not be granted an increase in the average percentage markup or labor and diagnostic work rate more than twice in one calendar year. E. All claims for warranty work for parts and labor made by dealers under this section shall be submitted to the manufacturer within one year of the date the work was performed. 

All claims submitted must be paid by the manufacturer within thirty days following receipt, provided that the claim has been approved by the manufacturer. The manufacturer has the right to audit claims for warranty work and to charge the dealer for any unsubstantiated, incorrect or false claims for a period of six months following payment. However, the manufacturer may audit and charge the dealer for any fraudulent claims during any period for which an action for fraud may be commenced under applicable state law. F. All claims submitted by dealers on the forms and in the manner specified by the manufacturer shall be either approved or disapproved within thirty days following their receipt.

 The manufacturer shall notify the dealer in writing of any disapproved claim and shall set forth the reasons why the claim was not approved. Any claim not specifically disapproved in writing within thirty days following receipt is approved, and the manufacturer is required to pay that claim within thirty days of receipt of the claim. G. A manufacturer may not otherwise recover all or any portion of its costs for compensating its dealers licensed in this state for warranty parts and service either by reduction in the amount due to the dealer or by separate charge, surcharge or other imposition. H. The provisions of this section shall not apply to recreational travel trailers or to parts of systems, fixtures, appliances, furnishings, accessories and features of motor homes.” SECTION 2. Section 57-16-7.1 NMSA 1978 (being Laws 1997, Chapter 14, Section 2) is amended to read: “57-16-7.1. SALES AND SERVICE INCENTIVES–AUDIT.–A manufacturer or distributor may audit a claim for sales and service incentives only during the [twenty-four month] six-month period immediately following payment or credit issued for the claim; however, this limitation shall not apply if there is a reasonable suspicion of fraud.” SECTION 3. EFFECTIVE DATE.–The effective date of the provisions of this act is July 1, 2011.

NEW YORK

§ 465. Procedures relating to warranties and sales incentives. 

1. Every franchisor shall properly fulfill any warranty agreement and/or franchisor’s service contract and shall compensate each of its franchised motor vehicle dealers for warranty parts and labor in amounts which reflect reasonable compensation for such work. All warranty claims and/or claims under a franchisor’s service contract made by franchised motor vehicle dealers shall be paid within thirty days following their approval. For parts reimbursement, other than components, systems, fixtures, appliances, furnishings, accessories and features of a house coach that are designed, used and maintained primarily for nonvehicular residential purposes, and for labor reimbursement, reasonable compensation shall not be less than the price and rate charged by the franchised motor vehicle dealer for like services to non-warranty and/or non-service contract customers. For purposes of this section, the price and rate charged by the franchised motor vehicle dealer for parts may be established by submitting to the franchisor one hundred sequential nonwarranty customer-paid service repair orders or the number of sequential nonwarranty customer-paid service repair orders written within a ninety day period, whichever is less, covering repairs made no more than one hundred eighty days before the submission, and declaring the price and rate, including average markup for the franchised motor vehicle dealer as its reimbursement rate. The reimbursement rate so declared shall go into effect thirty days following the declaration and shall be presumed to be reasonable, however a franchisor may rebut such presumption by showing that such rate so established is unreasonable in light of the practices of all other franchised motor vehicle dealers in the vicinity offering the same line make. 

The franchised motor vehicle dealer shall not request a change in the reimbursement rate more often than once in each calendar year. In establishing the labor reimbursement rate, the franchisor shall not require a franchised motor vehicle dealer to establish said rate by a methodology, or by requiring information, that is unduly burdensome or time consuming to provide, including, but not limited to, a transaction by transaction calculation. 

For the purposes of this section, the following parts or types of repairs shall be excluded from the parts and/or labor calculations and the franchisor’s reimbursement requirements under this section: (a) parts sold at wholesale; (b) tires; (c) routine maintenance not covered under any retail customer warranty such as fluids, filters and belts not provided in the course of repairs; (d) vehicle reconditioning; and (e) batteries replaced as part of a routine maintenance operation. If the franchisor rejects the declaration or attempts to rebut the declaration because of an error in the dealer’s submission, the franchisor shall identify with specificity the reason for rejection and identify the error or errors within the submission. In the event the franchisor rejects or rebuts the dealer’s initial declaration, the dealer shall have the opportunity, within sixty days to resubmit the full and corrected declaration addressing the alleged error or errors identified by the franchisor. The franchisor shall respond within sixty days.

 The one hundred eighty day requirement for the repair orders shall be stayed from the date of initial submission. In any action or proceeding held pursuant to this subdivision, the franchisor shall have the burden of proving that the rate declared by the dealer was unreasonable as described in this subdivision and that the proposed adjustment of the average percentage markup or rejection of the submission is reasonable pursuant to the provisions of this subdivision. 2. All warranty or sales incentive claims shall be either approved or disapproved within thirty days after their receipt. When any such claim is disapproved the franchised motor vehicle dealer shall be notified in writing of its disapproval within said period. 

Each such notice shall state the specific grounds upon which the disapproval is based. Failure to disapprove a claim within thirty days shall be deemed approval. 3. No franchisor shall conduct an audit or charge back any warranty payment, or any sales, advertising or marketing incentive payment (“incentive payments”) or otherwise hold a franchised motor vehicle dealer liable for charges more than one year, or five years in the case of fraud, after the date the franchisor made such payment to the dealer, without providing a notice to a franchised motor vehicle dealer of, or a mechanism that makes available to a franchised motor vehicle dealer, information regarding errors or issues regarding such dealer’s warranty, sales, advertising or marketing incentive claims that are the subject of the audit or chargeback.

 Nothing in this section shall be deemed to grant a dealer the right to access any file held by the manufacturer evaluating such dealer. In connection with a claim for warranty reimbursements, the dealer’s failure to document properly one part of a warranty repair that contains more than one part shall not be the sole basis to charge back the entire repair. A manufacturer shall not deny a claim submitted under this section based solely on a dealer’s incidental failure to comply with a specific claim processing requirement, a clerical error, or other administrative technicality, provided that the failure does not call into question the legitimacy of the claim and that the dealer corrects the claim according to franchisor guidelines.

NORTH CAROLINA

North Carolina General Statutes § 20-305.1 Automobile dealer warranty obligations 

(a) Each motor vehicle manufacturer, factory branch, distributor or distributor branch, shall specify in writing to each of its motor vehicle dealers licensed in this State the dealer’s obligations for preparation, delivery and warranty service on its products, the schedule of compensation to be paid such dealers for parts, work, and service in connection with warranty service, and the time allowances for the performance of such work and service. In no event shall such schedule of compensation fail to include reasonable compensation for diagnostic work and associated administrative requirements as well as repair service and labor. Time allowances for the performance of warranty work and service shall be reasonable and adequate for the work to be performed. The compensation which must be paid under this section must be reasonable, provided, however, that under no circumstances may the reasonable compensation under this section be in an amount less than the dealer’s current retail labor rate and the amount charged to retail customers for the manufacturer’s or distributor’s original parts for nonwarranty work of like kind, provided such amount is competitive with other franchised dealers within the dealer’s market. 

(b) Notwithstanding the terms of any franchise agreement, it is unlawful for any motor vehicle manufacturer, factory branch, distributor, or distributor branch to fail to perform any of its warranty obligations with respect to a motor vehicle, to fail to fully compensate its motor vehicle dealers licensed in this State for warranty parts other than parts used to repair the living facilities of recreational vehicles, at the prevailing retail rate according to the factors in subsection (a) of this section, or, in service in accordance with the schedule of compensation provided the dealer pursuant to subsection (a) above, or to otherwise recover all or any portion of its costs for compensating its motor vehicle dealers licensed in this State for warranty parts and service either by reduction in the amount due to the dealer, or by separate charge, surcharge, or other imposition, and to fail to indemnify and hold harmless its franchised dealers licensed in this State against any judgment for damages or settlements agreed to by the manufacturer, including, but not limited to, court costs and reasonable attorneys’ fees of the motor vehicle dealer, arising out of complaints, claims or lawsuits including, but not limited to, strict liability, negligence, misrepresentation, express or implied warranty, or recision or revocation of acceptance of the sale of a motor vehicle as defined in G.S. 25 2 608, to the extent that the judgment or settlement relates to the alleged defective negligent manufacture, assembly or design of new motor vehicles, parts or accessories or other functions by the manufacturer, factory branch, distributor or distributor branch, beyond the control of the dealer. 

Any audit for warranty parts or service compensation shall only be for the 12 month period immediately following the date of the payment of the claim by the manufacturer, factory branch, distributor, or distributor branch. Any audit for sales incentives, service incentives, rebates, or other forms of incentive compensation shall only be for the 12 month period immediately following the date of the payment of the claim by the manufacturer, factory branch, distributor, or distributor branch pursuant to a sales incentives program, service incentives program, rebate program, or other form of incentive compensation program. Provided, however, these limitations shall not be effective in the case of fraudulent claims. (b1) All claims made by motor vehicle dealers pursuant to this section for compensation for delivery, preparation, warranty and recall work including labor, parts, and other expenses, shall be paid by the manufacturer within 30 days after receipt of claim from the dealer.

 When any claim is disapproved, the dealer shall be notified in writing of the grounds for disapproval. Any claim not specifically disapproved in writing within 30 days after receipt shall be considered approved and payment is due immediately. No claim which has been approved and paid may be charged back to the dealer unless it can be shown that 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 either in accordance with the manufacturer’s reasonable written procedures or by other reasonable means. 

A manufacturer or distributor shall not deny a claim or reduce the amount to be reimbursed to the dealer as long as the dealer has provided reasonably sufficient documentation that the dealer: (1) Made a good faith attempt to perform the work in compliance with the written policies and procedures of the manufacturer; and (2) Actually performed the work. Notwithstanding the foregoing, a manufacturer shall not fail to fully compensate a dealer for warranty or recall work or make any chargeback to the dealer’s account based on the dealer’s failure to comply with the manufacturer’s claim documentation procedure or procedures unless both of the following requirements have been met: (1) The dealer has, within the previous 12 months, failed to comply with the same specific claim documentation procedure or procedures; and (2) The manufacturer has, within the previous 12 months, provided a written warning to the dealer by certified United States mail, return receipt requested, identifying the specific claim documentation procedure or procedures violated by the dealer. Nothing contained in this subdivision shall be deemed to prevent or prohibit a manufacturer from adopting or implementing a policy or procedure which provides or allows for the self audit of dealers, provided, however, that if any such self audit procedure contains provisions relating to claim documentation, such claim documentation policies or procedures shall be subject to the prohibitions and requirements contained in this subdivision. 

Notices sent by a manufacturer under a bona fide self audit procedure shall be deemed sufficient notice to meet the requirements of this subsection provided that the dealer is given reasonable opportunity through self audit to identify and correct any out of line procedures for a period of at least 60 days before the manufacturer conducts its own audit of the dealer warranty operations and procedures. 

A manufacturer may further not charge a dealer back subsequent to the payment of the claim unless a representative of the manufacturer has met in person at the dealership, or by telephone, with an officer or employee of the dealer designated by the dealer and explained in detail the basis for each of the proposed charge backs and thereafter given the dealer’s representative a reasonable opportunity at the meeting, or during the telephone call, to explain the dealer’s position relating to each of the proposed charge backs. In the event the dealer was selected for audit or review on the basis that some or all of the dealer’s claims were viewed as excessive in comparison to average, mean, or aggregate data accumulated by the manufacturer, or in relation to claims submitted by a group of other franchisees of the manufacturer, the manufacturer shall, at or prior to the meeting or telephone call with the dealer’s representative, provide the dealer with a written statement containing the basis or methodology upon which the dealer was selected for audit or review. 

(b2) A manufacturer may not deny a motor vehicle dealer’s claim for sales incentives, service incentives, rebates, or other forms of incentive compensation, reduce the amount to be paid to the dealer, or charge a dealer back subsequent to the payment of the claim unless it can be shown that the claim was false or fraudulent or that the dealer failed to reasonably substantiate the claim either in accordance with the manufacturer’s reasonable written procedures or by other reasonable means. 

(b3) Notwithstanding the terms of any franchise or other agreement, or the terms of any program, policy, or procedure of any manufacturer, it shall be unlawful for a manufacturer to take or threaten to take any adverse action against a dealer located in this State, or to otherwise discriminate against any dealer located in this State, on the basis that the dealer sold or leased a motor vehicle to a customer who either exported the vehicle to a foreign country or who resold the vehicle to a third party, unless the dealer knew or reasonably should have known that the customer intended to export or resell the motor vehicle prior to the customer’s purchase of the vehicle from the dealer. The conduct prohibited under this subsection includes, but is not limited to, a manufacturer’s actual or threatened: 

(i) failure or refusal to allocate, sell, or deliver motor vehicles to the dealer; or 

(ii) discrimination against any dealer in the allocation of vehicles; or 

(iii) charging back or withholding payments or other compensation or consideration for which a dealer is otherwise eligible for warranty reimbursement or under a sales promotion, incentive program, or contest; or 

(iv) disqualification of a dealer from participating in or discrimination against any dealer relating to any sales promotion, incentive program, or contest; or 

(v) termination of a franchise. In any proceeding brought pursuant to this subsection, there shall be a rebuttable presumption that the dealer, prior to the customer’s purchase of the vehicle, did not know nor should have reasonably known that the customer intended to export or resell the motor vehicle, if 

(i) following the sale, the vehicle is titled, registered, and, where applicable, taxes paid in any state or territory within the United States in the name of a customer who was physically present at the dealership at or prior to the time of sale, and (ii) the dealer did not know, prior to the consummation of the sale, that the vehicle would be shipped to a foreign country. 

(c) In the event there is a dispute between the manufacturer, factory branch, distributor, or distributor branch, and the dealer with respect to any matter referred to in subsection (a), (b), (b1), (b2), or (d) of this section, either party may petition the Commissioner in writing, within 30 days after either party has given written notice of the dispute to the other, for a hearing on the subject and the decision of the Commissioner shall be binding on the parties, subject to rights of judicial review and appeal as provided in Chapter 150B of the General Statutes; provided, however, that nothing contained herein shall give the Commissioner any authority as to the content of any manufacturer’s or distributor’s warranty. Upon the filing of a petition before the Commissioner under this subsection, any chargeback to or any payment required of a dealer by a manufacturer relating to warranty parts or service compensation, or to sales incentives, service incentives, rebates, or other forms of incentive compensation, shall be stayed during the pendency of the determination by the Commissioner. 

(d) Transportation damages. (1) Notwithstanding the terms, provisions or conditions of any agreement or franchise, the manufacturer is liable for all damages to motor vehicles before delivery to a carrier or transporter. 

(2) If a new motor vehicle dealer determines the method of transportation, the risk of loss passes to the dealer upon delivery of the vehicle to the carrier. (3) In every other instance, the risk of loss remains with the manufacturer until such time as the new motor vehicle dealer or his designee accepts the vehicle from the carrier. (4) Whenever a motor vehicle is damaged while in transit when the carrier or the means of transportation is designated by the manufacturer or distributor, or whenever a motor vehicle is otherwise damaged prior to delivery to the dealer, the dealer must: a. Notify the manufacturer or distributor of such damage within three working days or within such additional time as authorized by the franchise agreement of the occurrence of the delivery of the motor vehicle as defined in subsection (1) of this section; and b. Must request from the manufacturer or distributor authorization to repair the damages sustained or to replace the parts or accessories damaged. (5) In the event the manufacturer or distributor refuses or fails to authorize repair or replacement of any such damage within ten working days after receipt of notification of damage by the dealer, ownership of the motor vehicle shall revert to the manufacturer or distributor, and the dealer shall incur no obligation, financial or otherwise, for such damage to the motor vehicle. (5a) No manufacturer shall fail to disclose in writing to a new motor vehicle dealer, at the time of delivery of a new motor vehicle, the nature and extent of any and all damage and post manufacturing repairs made to such motor vehicle while in the possession or under the control of the manufacturer if the cost of such post manufacturing repairs exceeds three percent (3%) of the manufacturer’s suggested retail price. A manufacturer is not required to disclose to a new motor vehicle dealer that any glass, tires or bumper of a new motor vehicle was damaged at any time if the damaged item has been replaced with original or comparable equipment. (6) Nothing in this subsection (d) shall relieve the dealer of the obligation to cooperate with the manufacturer as necessary in filing any transportation damage claim with the carrier. (e) Damage/Repair Disclosure. Notwithstanding the provisions of subdivision (d)(4) of this section and in supplementation thereof, a new motor vehicle dealer shall disclose in writing to a purchaser of the new motor vehicle prior to entering into a sales contract any damage and repair to the new motor vehicle if the damage exceeds five percent (5%) of the manufacturer’s suggested retail price as calculated at the rate of the dealer’s authorized warranty rate for labor and parts. (1) A new motor vehicle dealer is not required to disclose to a purchaser that any damage of any nature occurred to a new motor vehicle at any time if the total cost of all repairs fails to exceed five percent (5%) of the manufacturer’s suggested retail price as calculated at the time the repairs were made based upon the dealer’s authorized warranty rate for labor and parts and the damaged item has been replaced with original or comparable equipment. 

(2) If disclosure is not required under this section, a purchaser may not revoke or rescind a sales contract or have or file any cause of action or claim against the dealer or manufacturer for breach of contract, breach of warranty, fraud, concealment, unfair and deceptive acts or practices, or otherwise due solely to the fact that the new motor vehicle was damaged and repaired prior to completion of the sale. (3) For purposes of this section, “manufacturer’s suggested retail price” means the retail price of the new motor vehicle suggested by the manufacturer including the retail delivered price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the new motor vehicle at the time of delivery to the new motor vehicle dealer which is not included within the retail price suggested by the manufacturer for the new motor vehicle. (f) The provisions of subsections (a), (b), (b1), (d) and (e) shall not apply to manufacturers and dealers of “motorcycles” as defined in G.S. 20 4.01(27). 

(f1) The provisions of subsections (a), (b), (b1), (b2), and (c) of this section applicable to a motor vehicle manufacturer shall also apply to a component parts manufacturer. For purposes of this section, a component parts manufacturer means a person, resident, or nonresident of this State who manufactures or assembles new motor vehicle “component parts” and directly warrants the component parts to the consumer. For purposes of this section, component parts means an engine, power train, rear axle, or other part of a motor vehicle that is not warranted by the final manufacturer of the motor vehicle. 

(f2) The provisions of subsections (d) and (e) of this section shall not apply to a State agency that assists the United States Department of Defense with purchasing, transferring, or titling a vehicle to another State agency, a unit of local government, a volunteer fire department, or a volunteer rescue squad. (g) Truck Dealer Cost Reimbursement. Every manufacturer, manufacturer branch, distributor, or distributor branch of new motor vehicles, or any affiliate or subsidiary thereof, which manufactures or distributes new motor vehicles with a gross vehicle weight rating of 16,000 pounds or more shall compensate its new motor vehicle dealers located in this State for the cost of special tools, equipment, and training for which its dealers are liable when the applicable manufacturer, manufacturer branch, distributor, or distributor branch sells a portion of its vehicle inventory to converters and other nondealer retailers. The purpose of this reimbursement is to compensate truck dealers for special additional costs these dealers are required to pay for servicing these vehicles when the dealers are excluded from compensation for these expenses at the point of sale.

The compensation which shall be paid pursuant to this subsection shall be applicable only with respect to new motor vehicles with a gross vehicle weight rating of 16,000 pounds or more which are registered to end users within this State and that are sold by a manufacturer, manufacturer branch, distributor, or distributor branch to either: (1) Persons or entities other than new motor vehicle dealers with whom the manufacturer, manufacturer branch, distributor, or distributor branch has entered into franchises; or (2) Persons or entities that install custom bodies on truck chassis, including, but not limited to, mounted equipment or specialized bodies for concrete distribution, firefighting equipment, waste disposal, recycling, garbage disposal, buses, utility service, street sweepers, wreckers, and rollback bodies for vehicle recovery; provided, however, that no compensation shall be required to be paid pursuant to this subdivision with respect to vehicles sold for purposes of manufacturing or assembling school buses. 

The amount of compensation which shall be payable by the applicable manufacturer, manufacturer branch, distributor, or distributor branch shall be six hundred dollars ($600.00) per new motor vehicle registered in this State whose chassis has a gross vehicle weight rating of 16,000 pounds or more. The compensation required pursuant to this subsection shall be paid by the applicable manufacturer, manufacturer branch, distributor, or distributor branch to its franchised new motor vehicle dealer in closest proximity to the registered address of the end user to whom the motor vehicle has been registered within 30 days after such registration. Upon receiving a request in writing from one of its franchised dealers located in this State, a manufacturer, manufacturer branch, distributor, or distributor branch shall promptly make available to such dealer its records relating to the registered addresses of its new motor vehicles registered in this State for the previous 12 months and its payment of compensation to dealers as provided in this subsection. (1973, c. 88, s. 3; c. 1331, s. 3; 1983, c. 704, ss. 11 13; 1987, c. 827, s. 1; 1989, c. 614, ss. 1, 2; 1991, c. 561, ss. 1 4; 1993, c. 116, ss. 1, 2; 1995, c. 156, s. 1; 1997 319, s. 4; 1999 335, ss. 3, 3.1, 4; 2003 113, s. 5; 2003 258, s. 4; 2007 513, ss. 5 7, 11; 2009 338, ss. 3, 4; 2009 550, s. 2(c).)

NORTH DAKOTA

51-07-29. Warranty work compensation.


1. A motor vehicle manufacturer shall include reasonable compensation for diagnostic
work, as well as repair service, parts, and labor, in warranty work compensation. In
addition, a motor vehicle manufacturer shall provide adequate time allowances for
diagnosis and performance of warranty work and service for the work performed. The
hourly labor rate paid by a motor vehicle manufacturer to the dealer for warranty
services may not be less than the average rate charged by the dealer for like service
to nonwarranty customers for nonwarranty service as provided under subsection 5. A
motor vehicle manufacturer may not reimburse a dealer for parts used in the
performance of warranty repair at a lower rate than the average retail rate customarily
charged by the dealer for these parts as provided under subsection 4.


2. A motor vehicle manufacturer shall pay a dealer on a claim made by a dealer under
this section within thirty days of the approval of the claim. The manufacturer shall
either approve or disapprove a claim within thirty days after the claim is submitted to
the manufacturer. The manufacturer may prescribe the manner in which and the forms
Page No. 13

on which the dealer must present the claim. A claim not specifically disapproved in
writing within thirty days after the manufacturer receives the claim must be construed
to be approved and the manufacturer shall pay the claim within thirty days.


3. A motor vehicle manufacturer, factory branch, distributor, or distributor branch shall
fully compensate its motor vehicle dealers licensed in this state for warranty parts,
work, and service specified in this section. Failure to fully compensate includes a
reduction in the amount due to the dealer or imposing a separate charge, surcharge,
or other imposition by which the motor vehicle manufacturer, factory branch,
distributor, or distributor branch seeks to recover the costs of complying with this
section from the dealer.


4. The retail rate customarily charged by the dealer for parts is established by the dealer
submitting to the manufacturer or distributor one hundred sequential nonwarranty
customer-paid service repair orders that contain warranty-like parts or ninety
consecutive days of nonwarranty customer-paid service repair orders that contain
warranty-like parts, whichever is less, covering repairs made no more than one
hundred eighty days before the submission and declaring the average percentage
markup.


5. The retail rate customarily charged by the dealer for labor must be established using
the same process as provided under subsection 4 and declaring the average labor
rate. The average labor rate must be determined by dividing the amount of the dealer’s
total labor sales by the number of total hours that generated those sales. If a labor rate
and parts markup rate are simultaneously declared by the dealer, the dealer may use
the same repair orders to complete each calculation as provided under subsection 4.


6. In calculating the retail rate customarily charged by the dealer for parts and labor, the

following work may not be included in the calculation:
a. Repairs for manufacturer or distributor special events, specials, or promotional
discounts for retail customer repairs;
b. Parts sold at wholesale;
c. Routine maintenance not covered under any retail customer warranty, including
fluids, filters, and belts not provided in the course of repairs;
d. Nuts, bolts, fasteners, and similar items that do not have an individual part
number;
e. Tires; and
f. Vehicle reconditioning.


7. The average of the parts markup rates and labor rate is presumed to be fair and
reasonable and must go into effect thirty days following the manufacturer’s approval. A
manufacturer or distributor may rebut the presumption by reasonably substantiating
that a rate is unreasonable in light of the practices of all other franchised motor vehicle
dealers in an economically similar area of the state offering the dealer’s declaration of
the same line-make vehicles, not later than thirty days after submission. If the average
parts markup rate or average labor rate is rebutted, or both, the manufacturer or
distributor shall propose an adjustment of the average percentage markup based on
that rebuttal not later than thirty days after submission.


8. Each manufacturer, in establishing a schedule of compensation for warranty work,
shall rely on the vehicle dealer’s written schedule of hourly labor rates and parts and
may not obligate any vehicle dealer to engage in unduly burdensome or
time-consuming documentation of rates or parts, including obligating vehicle dealers to
engage in transaction-by-transaction or part-by-part calculations.


9. A dealer or manufacturer may demand that the average parts markup or average labor
rate be calculated using the process provided under subsections 4 and 5; however, the
demand for the average parts markup may not be made within twelve months of the
last parts markup declaration and the demand for the average labor rate may not be
made within twelve months of the last labor rate declaration. If a parts markup or labor
rate is demanded by the dealer or manufacturer, the dealer shall determine the repair
orders to be included in the calculation under subsections 4 and 5.
Page No. 14

OHIO

4517.52 Fulfillment and compensation for warranty and recall obligations. 

(A) Each franchisor shall fulfill warranty and recall obligations of repairing and servicing motor vehicles, including all parts and components manufactured for installation in any motor vehicle. 

(B) Each franchisor shall compensate each of its franchisees for labor and parts used to fulfill warranty and recall obligations of repair and servicing at rates not less than the rates charged by the franchisee to its retail customers for warranty-like labor and parts for nonwarranty work. A franchisee, other than a franchisee that deals in recreational vehicles, may establish rates of compensation for labor performed and parts used by the franchisee for purposes of this section if all of the following apply: 

(1) The franchisee submits to the franchisor either of the following:

 (a) One hundred sequential nonwarranty service repair orders for warranty-like repairs that have been paid by a customer and closed by the time of submission;

 (b) All service repair orders for warranty-like repairs, that have been paid by a customer and closed by the time of submission, for a period of ninety consecutive days. A franchisee either may submit a set of repair orders for purposes of calculating both its retail labor rate and its retail parts markup percentage, or may submit separate sets of repair orders for purposes of calculating its retail labor rate and its retail parts markup percentage separately. 

The repair orders submitted under division (B)(1)(a) or (b) of this section must be from a period occurring not more than one hundred eighty days before the submission. Subject to division (C)(3) of this section, if a franchisor determines from any set of repair orders submitted under this section that the retail labor rate or parts markup percentage calculated under division (B)(2) or (3) of this section is substantially higher or lower than the rate currently on record with the franchisor for labor or parts, the franchisor may request additional documentation for a period of either ninety days prior to or ninety days subsequent to the time period for which the repair orders were submitted for purposes of an alteration. 

(2) The franchisee calculates its retail labor rate by determining the franchisee’s total labor sales from the service repair orders submitted under division (B)(1) of this section and dividing that amount by the total number of labor hours that generated those sales.

(3) The franchisee calculates its retail parts markup percentage by determining the franchisee’s total parts sales from the service repair orders submitted under division (B)(1) of this section and dividing that amount by the franchisee’s total cost for the purchase of those parts, subtracting one from that amount, and then multiplying the amount by one hundred.

 (4) In calculating the retail labor rate in division (B)(2) of this section and the retail parts markup percentage in division (B)(3) of this section, the franchisee omits charges for any of the following from the calculation: (a) Manufacturer or distributor special events, specials, or promotional discounts for retail customer repairs; (b) Parts sold, or repairs performed, at wholesale; (c) Routine maintenance that is not covered under a retail customer warranty, including the replacement of fluids, filters, and belts that are not provided in the course of other repairs; (d) Items that do not have individual part numbers, such as nuts, bolts, and fasteners; (e) Vehicle reconditioning; (f) Accessories; (g) Repairs of damage caused by a collision, a road hazard, the force of the elements, vandalism, theft, or operator negligence; (h) Parts sold or repairs performed for insurance carriers; 

(i) Vehicle emission or safety inspections required by law; 

(j) Goodwill or policy repairs or replacements;

 (k) Repairs for which volume discounts have been negotiated with government agencies or insurance carriers; (l) Repairs performed on vehicles from a different line-make; (m) Replacement of tires or related elements.

 (5) The franchisee provides notice of its retail labor rate and retail parts markup percentage calculated in accordance with this section to the franchisor. 

(C) (1) A franchisor may contest the retail labor rate or retail parts markup percentage that was calculated by the franchisee under division (B) of this section within thirty days after receiving notice from the franchisee. If the franchisor seeks to contest the retail labor rate or retail parts markup percentage, the franchisor shall notify the franchisee that the franchisor believes the rate or markup percentage is materially inaccurate or substantially different than that of other similarly situated, same line-make new motor vehicle dealers in the vicinity, provide a full explanation of the reasons the franchisor disagrees with the rate or markup percentage, provide evidence substantiating the franchisor’s position, and propose an adjustment of the contested rate or markup percentage. The franchisor shall not modify its notice to the franchisee or its grounds for contesting the rate or markup percentage after submitting a notice to the franchisee under division (C)(1) of this section. 

(2) If the franchisor does not contest the rate or markup percentage that was calculated by the franchisee under division (B) of this section within thirty days after receiving notice of the rate or markup percentage from the franchisee, the uncontested rate or markup percentage takes effect. The franchisor then shall use the rate and markup percentage to determine compensation for any warranty and recall work and service performed by the franchisee until the rate or markup percentage is modified. 

(3) If the franchisor contests a rate or markup percentage established by the franchisee under division (B) of this section, the franchisor and franchisee shall resolve the disagreement through the franchisor’s internal dispute resolution process. However, the franchisee may appeal a determination made as part of the dispute resolution process to a court of competent jurisdiction. Any rate or markup percentage established either through an internal dispute resolution process or by a court as part of an appeal under this section shall be applied retroactively to govern reimbursement for labor or parts, as applicable, beginning thirty days after the date the franchisee submitted the disputed rate or markup percentage under division (B) of this section. 

(4) A franchisee shall not establish or modify a retail labor rate or retail parts markup percentage more frequently than once per calendar year. (D) When calculating the compensation that must be provided to a franchisee for labor and parts used to fulfill warranty and recall obligations under this section, all of the following apply: 

(1) The franchisor shall use time allowances for the diagnosis and performance of the warranty and recall work and service that are reasonable and adequate for the work or services to be performed by a qualified technician.

 (2) The franchisor shall use any retail labor rate and any retail parts markup percentage established in accordance with this section in calculating the compensation. (3) If the franchisor provided a part or component to the franchisee at no cost to use in performing repairs under a recall, campaign service action, or warranty repair, the franchisor shall provide to the franchisee an amount equal to the retail parts markup for that part or component, which shall be calculated by multiplying the dealer cost for the part or component as listed in the franchisor’s price schedule by the retail parts markup percentage.

 (4) A franchisor shall not assess penalties, surcharges, or similar costs to a franchisee, transfer or shift any costs to a franchisee, limit allocation of vehicles or parts to a franchisee, or otherwise take retaliatory action against a franchisee based on any franchisee’s exercise of its rights under this section. It is the burden of the franchisee to prove any claims under division (D)(4) of this section by a preponderance of the evidence. Nothing in this section prohibits a franchisor from increasing the price of a vehicle or part in the normal course of business. (E) A franchisor shall not require a franchisee to establish a retail labor rate or retail parts markup percentage using any method that is unduly burdensome or time consuming, or require the use of information that is unduly burdensome or time consuming to obtain, including part-by-part or transaction-by-transaction calculations or utilization of the franchisee’s financial statement. Further, no franchisor shall unilaterally calculate a retail labor rate or retail parts markup percentage for a franchisee. Divisions (A), (C), (D), and (E) of this section do not apply to franchisors or franchisees who deal in recreational vehicles. Amended by 131st General Assembly File No. TBD, SB 242, §1, eff. 9/14/2016. Amended by 128th General AssemblyFile No.42, SB 204, §1, eff. 9/10/2010. Effective Date: 10-22-1987 .

OKLAHOMA

Oklahoma Motor Vehicle Commission Laws Section 565. 9. 

Being a factory that: a. has attempted to coerce or has coerced any new motor vehicle dealer to enter into any agreement or to cancel any agreement, or fails to act in good faith and in a fair, equitable and nondiscriminatory manner; or has directly or indirectly coerced, intimidated, threatened or restrained any motor vehicle dealer; or has acted dishonestly, or has failed to act in accordance with the reasonable standards of fair dealing, b. has failed to compensate its dealers for the work and services they are required to perform in connection with the dealer’s delivery and preparation obligations according to the agreements on file with the Commission which must be found by the Commission to be reasonable, or fail to adequately and fairly compensate its dealers for labor, parts and other expenses incurred by such dealer to perform under and comply with manufacturer’s warranty agreements.

 Adequate and fair compensation for parts shall be established by the dealer submitting to the manufacturer or distributor one hundred sequential nonwarranty customer-paid service repair orders which contain warranty-like parts, or ninety (90) consecutive days of nonwarranty customer-paid service repair orders which contain warranty-like parts, whichever is less, covering repairs made no more than one hundred eighty (180) days before the submission and declaring the average percentage markup. Adequate and fair compensation for labor shall be established by the dealer submitting to the manufacturer or distributor one hundred sequential customer-paid service repair orders which contain labor charges, or ninety (90) consecutive days of customerpaid service repair orders which contain labor charges, whichever is less.

 When submitting repair orders to calculate a labor rate, a dealer need not include repair orders for routine maintenance. A manufacturer or distributor may, not later than thirty (30) days after submission, rebut that declared rate in writing by reasonably substantiating that the rate is inaccurate or unreasonable in light of the practices of all other franchised motor vehicle dealers in an economically similar part of the state offering the same line-make vehicles. The retail rate shall go into effect thirty (30) days following the approval by the manufacturer, subject to audit of the submitted repair orders by the franchisor and a rebuttal of the declared rate as described above. If the declared rate is rebutted, the manufacturer or distributor shall propose an adjustment in writing of the average percentage markup based on that rebuttal not less than thirty (30) days after submission. If the dealer does not agree with the proposed average percentage markup, the dealer may file a protest with the Commission not later than thirty (30) days after receipt of that proposal by the manufacturer or distributor. In the event a protest is filed, the manufacturer or distributor shall have the burden of proof to establish the new motor vehicle dealer’s OMVC Laws (Nov 2014) 14 submitted rate was inaccurate or unreasonable in light of the practices of all other franchised motor vehicle dealers in an economically similar part of the state. 

A manufacturer of distributor may not retaliate against any new motor vehicle dealer seeking to exercise its rights under this provision. A manufacturer of distributor may require a dealer to submit repair orders in accordance with this section in order to validate a dealer’s retail rate for parts or labor not more often than once every twelve (12) months. All claims made by dealers for compensation for delivery, preparation and warranty work shall be paid within thirty (30) days after approval and shall be approved or disapproved within thirty (30) days after receipt. When any claim is disapproved, the dealer shall be notified in writing of the grounds for disapproval. The dealer’s delivery, preparation and warranty obligations as filed with the Commission shall constitute the dealer’s sole responsibility for product liability as between the dealer and manufacturer. 

A factory may reasonably and periodically audit a new motor vehicle dealer to determine the validity of paid claims for dealer compensation or any charge-backs for warranty parts or service compensation. Except in cases of suspected fraud, audits of warranty payments shall only be for the one-year period immediately following the date of the payment. A manufacturer shall reserve the right to reasonable, periodic audits to determine the validity of paid claims for dealer compensation or any charge-backs for consumer or dealer incentives. Except in cases of suspected fraud, audits of incentive payments shall only be for a one-year period immediately following the date of the payment. A factory shall not deny a claim or charge a new motor vehicle dealer back subsequent to the payment of the claim unless the factory can show that the claim was false or fraudulent or that the new motor vehicle dealer failed to reasonably substantiate the claim by the written reasonable procedures of the factory. 

The factory shall provide written notice to a dealer of a proposed chargeback that is the result of an audit along with the specific audit results and proposed charge-back amount. A dealer that receives notice of a proposed charge-back pursuant to a factory’s audit has the right to file a protest with the Commission within thirty (30) days after receipt of the notice of the charge-back or audit results, whichever is later. The factory is prohibited from implementing the charge-back or debiting the dealer’s account until either the time frame for filing a protest has passed or a final adjudication is rendered by the Commission, whichever is later, unless the dealer has agreed to the charge-back or charge-backs, c. unreasonably fails or refuses to offer to its same line-make franchised dealers all models manufactured for that line-make, or unreasonably requires a dealer to pay any extra fee, purchase unreasonable advertising displays or other materials, or remodel, renovate, or recondition the dealer’s existing facilities as a prerequisite to receiving a model or series of vehicles. 

The failure to deliver any such new motor vehicle shall not be considered a violation of the section if the failure is not arbitrary or is due to lack of manufacturing capacity or to a strike or labor difficulty, a shortage of materials, a freight embargo or other cause over which the manufacturer has no control. However, this subparagraph shall not apply to recreational vehicles or limited production model vehicles,

OREGON

§ 650.158¹ Predelivery preparation and warranty service • • notice to dealers • • schedule of compensation • • determination • • claims by dealers 

(1) Each manufacturer, distributor or importer shall specify in writing to each of the manufacturers, distributors or importers dealers in this state: (a) The dealers obligations for predelivery preparation and warranty service on the manufacturers, distributors or importers motor vehicles; (b) The schedule of compensation the manufacturer, distributor or importer will pay the dealer for parts, work and service in connection with predelivery preparation and warranty service; and (c) The time allowances for performing predelivery preparation and warranty service. 

(2)(a) A schedule of compensation must include reasonable compensation for diagnostic work, repair service and labor. Time allowances for diagnosing and performing predelivery and warranty service must be reasonable and adequate for the work to be performed. A manufacturer, distributor or importer may not pay an hourly rate to a dealer that is less than the rate the dealer charges nonwarranty customers for nonwarranty service and repairs. Reimbursement for parts, other than parts used to repair the living facilities of motor homes, that the dealer purchases for use in performing predelivery and warranty service must be the amount the dealer charges nonwarranty customers, as long as the amount is not unreasonable. 

(b)(A) For purposes of this subsection and subject to subparagraphs (B) and (C) of this paragraph, to determine compensation under this subsection, a dealer shall propose an hourly rate and an amount for parts that the dealer charges nonwarranty customers by submitting to the manufacturer, distributor or importer copies of 100 sequential nonwarranty service repair invoices that customers paid or 90 consecutive days worth of nonwarranty service invoices that customers paid, whichever is less, for repairs made not more than 180 days before the dealers submission. If the manufacturer, distributor or importer does not contest the dealers proposal and the dealer otherwise complies with the provisions of this paragraph, the dealers proposal is presumed to be fair and reasonable.

 (B) A manufacturer, distributor or importer may contest the dealers proposal with evidence that the dealers proposal is not accurate or on the basis that the dealers proposal does not reasonably conform with the hourly rate or the amount for parts that other dealers charge nonwarranty customers in the same line-make in market areas that are contiguous to the dealers market area or with other relevant evidence. In contesting a dealers proposal based on evidence from other dealers in the contiguous market area, a manufacturer, distributor or importer shall rely on evidence from at least three other dealers in the contiguous market area or three dealers in an economically similar market within the manufacturers, distributors or importers region.

 (C) A dealer may not include in the dealers proposal: 

(i) Repairs for a manufacturers, distributors or importers specials, special events or promotional discounts for retail customer repairs;

 (ii) Parts sold at wholesale; 

(iii) Routine maintenance that a retail customer warranty does not cover, such as fluids, filters and belts that a dealer uses in performing work other than repairs; 

(iv) Nuts, bolts, fasteners and similar items that do not have an individual part number; and

 (v) Vehicle reconditioning. 

(c) The hourly rate or the amount for parts that a dealer charges nonwarranty customers that the dealer proposes under paragraph

 (b)(A) of this subsection becomes effective 30 days after the manufacturer, distributor or importer approves the hourly rate or the amount for parts. For purposes of this paragraph, a manufacturer, distributor or importer approves the dealers proposal if the manufacturer, distributor or importer does not contest the proposed hourly rate or amount for parts within 30 days after the dealer submits the proposal. (d) If a manufacturer, distributor or importer successfully contests a dealers proposal, the manufacturer, distributor or importer shall propose an adjustment to the dealers proposal not later than 30 days after the dealer submits the dealers proposal.

 (e) Once per year, a manufacturer, distributor or importer may verify the dealers hourly rate or the amount for parts the dealer charges nonwarranty customers. If the manufacturer, distributor or importer finds that the dealers hourly rate or the amount for parts has decreased, the manufacturer, distributor or importer may reduce the dealers compensation under this subsection prospectively. 

(3) A manufacturer, distributor or importer shall include, in written notices of vehicle recalls to motor vehicle owners and dealers, the expected date by which necessary parts and equipment will be available to the dealers to correct the defect or defects. A manufacturer, distributor or importer shall adequately compensate a dealer for repair service the dealer performs under the recall.

 (4) A manufacturer, distributor or importer shall:

 (a) Pay or credit a dealer for labor or parts the dealer claims under this section within 30 days after approving the dealers claim; 

(b) Approve or disapprove, in the manner the manufacturer, distributor or importer specifies, all claims that a dealer makes for labor or parts within 30 days after receiving the claim;

 (c) Treat as approved any claim that a manufacturer, distributor or importer did not approve or disapprove within 30 days after the manufacturer, distributor or importer received the claim and pay or credit the dealer for the claim within 60 days after receiving the claim; and (d) Notify the dealer in writing of the manufacturers, distributors or importers grounds for disapproving a claim.

 [1991 c.609 §3; 1999 c.660 §5; 2013 c.329 §3]

PENNSYLVANIA

BOARD OF VEHICLES ACT Act of Dec. 22, 1983, P.L. 306, No. 84

Section 9.

Reimbursement for all parts and service required by the manufacturer or distributor; reimbursement audits.

(a) Manufacturers or distributors to notify dealers of their obligations.–

(1) Each new vehicle manufacturer or distributor shall specify in writing to each of its new vehicle dealers licensed in this Commonwealth the dealer’s obligations for predelivery preparation and warranty service on its products, shall compensate the new vehicle dealer for service required of the dealer by the manufacturer or distributor and shall provide the dealer with a schedule of compensation to be paid the dealer for parts, work and service, and the time allowance for the performance of such work and service.

(2) Compensation for parts, including major assemblies used in warranty service, shall be at the dealer’s retail rate. The following shall apply:

(i) The dealer’s retail rate for parts shall be established by the dealer’s submitting to the manufacturer or distributor a declaration of the average percentage markup which shall be the lesser of the following orders which cover repairs made no more than 180 days before the submission:

(A) One hundred sequential nonwarranty customer-paid service repair orders which contain parts that are used in warranty-like service or repair.

(B) Ninety consecutive days of nonwarranty customer-paid service repair orders which contain parts that are used in warranty-like service or repair.

(ii) The declaration under subparagraph (i) shall be presumed to be reasonable, except that a manufacturer or distributor may, not later than 60 days after submission, rebut the presumption by substantiating that the declaration is unreasonable or materially inaccurate.

(iii) The retail rate shall go into effect 60 days following the declaration under subparagraph (i), unless the franchisor audits the submitted repair orders and a rebuttal under subparagraph (ii) occurs.

(iv) If the declared retail rate is rebutted, the manufacturer or distributor shall propose an adjustment of the markup based on the rebuttal no later than 60 days after submission.

(v) A manufacturer shall provide written support to the dealer for the rebuttal retail rate that is proposed. If the dealer does not agree with the proposed markup, the dealer may file a protest after receipt of the proposal by the manufacturer or distributor. If a protest is filed, the board shall inform the manufacturer or distributor that a protest has been filed and that a hearing will be held on the protest. In a hearing held under this subparagraph, the manufacturer or distributor shall have the burden of proving that:

(A) the retail rate declared by the dealer was unreasonable or materially inaccurate; and

(B) the manufacturer’s or distributor’s proposed adjustment of the markup is reasonable.

(3) Compensation for labor used in warranty service shall be at the dealer’s retail rate. The following shall apply:

(i) The dealer’s hourly retail rate for labor shall be established by submitting the following to the manufacturer or distributor:

(A) A declaration of the average labor rate calculated by dividing the amount of the dealer’s total labor sales by the number of total labor hours that generated the sales.

(B) The lesser of the following orders which cover repairs made no more than 180 days before the submission:

(I) One hundred sequential nonwarranty customer-paid service repair orders.

(II) Ninety consecutive days of nonwarranty customer-paid service repair orders.

(ii) The declaration under subparagraph (i)(A) shall be presumed to be reasonable, except that a manufacturer or distributor may, no later than 60 days after submission, rebut the presumption by substantiating that the rate is unreasonable or materially inaccurate.

(iii) The average labor rate shall go into effect 60 days following the declaration under subparagraph

(i)(A), unless the franchisor audits the submitted repair orders and a rebuttal under subparagraph (ii) occurs.

(iv) If the declared rate is rebutted, the manufacturer or distributor shall propose an adjustment of the labor rate based on the rebuttal not later than 60 days after submission.

(v) A manufacturer shall provide written support to the dealer for the rebuttal rate that is proposed. If the dealer does not agree with the proposed labor rate, the dealer may file a protest after receipt of the proposal by the manufacturer or distributor. If a protest is filed, the board shall inform the manufacturer or distributor that a protest has been filed and that a hearing will be held on the protest. In a hearing held under this subparagraph, the manufacturer or distributor shall have the burden of proving that:

(A) the retail rate declared by the dealer was unreasonable or materially inaccurate; and

(B) the manufacturer’s or distributor’s proposed adjustment of the retail rate is reasonable.

(4) This subsection shall not apply to manufacturers or distributors of manufactured housing or recreational vehicles.

((a) amended Nov. 1, 2013, P.L., No.84)

(b) ((b) deleted by amendment Nov. 1, 2013, P.L. , No.84)

(b.1)

Exceptions.–When calculating the retail rate customarily charged by the dealer for parts and labor under this section, the following work shall not be included:

Repairs for manufacturer or distributor special events, specials or promotional discounts for retail customer repairs.
(2) Parts sold at wholesale.

(3) Routine maintenance not covered under a retail customer warranty, such as fluids, filters and belts not provided in the course of repairs.

(4) Nuts, bolts, fasteners and similar items that do not have an individual part number.

(5) Tires.

(6) Vehicle reconditioning.

((b.1) added Nov. 1, 2013, P.L. , No.84)

(b.2) Compensation.–If a manufacturer or distributor furnishes a part or component to a dealer, at no cost, to use in performing repairs under a recall, campaign service or warranty repair, the manufacturer or distributor shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this section by compensating the dealer the average markup on the cost for the part or component as listed in the manufacturer’s or distributor’s price schedule, minus the cost for the part or component.

RHODE ISLAND

CHAPTER 31-5.1 Regulation of Business Practices Among Motor Vehicle Manufacturers, Distributors, and Dealers SECTION 31-5.1-6 § 31-5.1-6. Warranty agreement. 

(a) Every manufacturer shall properly fulfill any warranty agreement and adequately and fairly compensate each of its motor vehicle dealers for labor and parts. In no event shall that compensation fail to include reasonable compensation for diagnostic work, as well as repair service and labor. All claims made by motor vehicle dealers for labor and parts shall be paid in accord with the provisions of subsection

 (b) of this section. Any delay in payment after approval or disapproval that is caused by conditions beyond the reasonable control of the manufacturer shall not constitute a violation of this section. Reimbursement for warranty repairs or diagnostic work shall be at the dealer retail rate in effect at the time the warranty repair or diagnostic work is performed. (b) A claim filed under this section by a dealer with a manufacturer or distributor shall be:

 (1) In the manner and form prescribed by the manufacturer or distributor; and

 (2)(i) Approved or disapproved within (30) days of receipt. 

(ii) A claim not approved or disapproved within thirty (30) days of receipt shall be deemed approved. 

(iii) Payment of, or credit issued on, a claim filed under this section shall be made within thirty (30) days of approval. 

(3)(i) If a claim filed under this section is shown by the manufacturer or distributor to be false or unsubstantiated, the manufacturer or distributor may charge back the claim within twelve (12) months from the date the claim was paid or credit issued. 

(ii) A manufacturer or distributor shall not charge back a claim based solely on a motor vehicle dealer’s incidental failure to comply with a specific claim processing requirement, such as a clerical error or other administrative technicality that does not put into question the legitimacy of the claim after the motor vehicle dealer properly resubmits the claim in accordance with the manufacturer’s or distributor’s submission guidelines.

 (iii) A dealer shall have no less than sixty (60) days from the date of notification by a manufacturer or distributor of a charge back to the dealer to resubmit a claim for payment or compensation if the claim was denied for a dealer’s incidental failure as set forth in subsection (3)(ii) of this section, whether the chargeback was a direct or an indirect transaction. 

(iv) This subdivision does not limit the right of a manufacturer or distributor to charge back for any claim that is proven to be fraudulent. History of Section. (P.L. 1974, ch. 292, § 1; P.L. 1981, ch. 346, § 1; P.L. 1982, ch. 448, § 1; P.L. 1995, ch. 339, § 1; P.L. 2014, ch. 353, § 1; P.L. 2014, ch. 397, § 1.)

SOUTH CAROLINA

32-6B-61. Schedule of compensation for warranty work. 

The schedule of compensation for warranty work shall include reasonable compensation for diagnostic work, as well as repair service, parts, and labor. Time allowances for diagnosis and performance of warranty work and service shall be adequate for the work to be performed. The hourly labor rate paid to the dealer for warranty services may not be less than the rate charged by the dealer for like service to nonwarranty customers for nonwarranty service. 

Reimbursement for parts used in the performance of warranty repair may not be less than the current retail rate customarily charged by the vehicle dealer for such parts. Each manufacturer, in establishing a schedule of compensation for warranty work, shall rely on the vehicle dealer’s written schedule of hourly labor rates and parts and may not obligate any vehicle dealer to engage in unduly burdensome documentation thereof, including, without limitation, obligating vehicle dealers to engage in transaction by transaction calculations. Source: SL 1990, ch 245, § 2; SL 2010, ch 156, § 14, eff. Mar. 9, 2010.

TENNESSEE

Currently there are no laws allowing retail rates for parts or labor in Tennessee.

TEXAS

SUBCHAPTER I. WARRANTIES: REIMBURSEMENT OF DEALER Sec. 2301.401. WARRANTY, PREPARATION, AND DELIVERY REQUIREMENTS. 

(a) On request, a manufacturer or distributor shall provide to the department a copy of the current requirements the manufacturer or distributor imposes on its dealers with respect to the dealer’s: (1) duties under the manufacturer’s or distributor’s warranty; and (2) vehicle preparation and delivery obligations.

 (b) Warranty or preparation and delivery requirements placed on a dealer by a manufacturer are not enforceable unless the requirements are reasonable. Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003. Amended by: Acts 2011, 82nd Leg., R.S., Ch. 1290 (H.B. 2017), Sec. 14, eff. September 1, 2011. Acts 2013, 83rd Leg., R.S., Ch. 1135 (H.B. 2741), Sec. 15, eff. September 1, 2013. Sec. 2301.402. RATE OF COMPENSATION. 

(a) A manufacturer or distributor shall fairly and adequately compensate its dealers for warranty work. (b) A manufacturer or distributor may not pay or reimburse a dealer an amount of money for warranty work that is less than the amount the dealer charges a retail customer for similar nonwarranty work. 

(c) In computing the amount of money a dealer charges a retail customer under Subsection (b), the manufacturer or distributor shall use the greater of:

 (1) the average labor rate charged during the preceding six months by the dealer on 100 sequential nonwarranty repair orders, exclusive of routine maintenance; or 

(2) the average labor rate charged for 90 consecutive days during the preceding six months by the dealer for nonwarranty repairs, exclusive of routine maintenance. Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003. Sec. 2301.403. ADJUSTMENT OF WARRANTY LABOR RATE. (a) A dealer may request an adjustment in the dealer’s warranty labor rate. The request must be sent to the manufacturer or distributor by certified mail, return receipt requested, and must state the requested rate and include information reasonably necessary to enable the manufacturer or distributor to adequately evaluate the request. 

(b) Not later than the 60th day after the date of receipt of a request under this section, the manufacturer or distributor shall provide written notice to the requesting dealer of the approval or disapproval of the request. If the request is disapproved, the manufacturer or distributor shall state the reasons for the disapproval.

 (c) A requesting dealer may file a protest with the board if the manufacturer or distributor: 

(1) disapproves the request; or (2) fails to respond within the time required by this section. 

(d) After a protest is filed, the board may uphold the manufacturer’s or distributor’s decision only if the manufacturer or distributor proves by a preponderance of the evidence that the disapproval of the request or failure to respond was reasonable. 

(e) If the board does not determine that the disapproval of the request or failure to respond was reasonable, the board shall order the requested rate into effect as of the 60th day after the receipt of the request by the manufacturer or distributor. 

(f) Except by agreement of the parties, a warranty labor rate established under this subchapter may not be adjusted more often than once a year. Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003.

UTAH

13-14-204. Franchisor’s obligations related to service — Franchisor audits — Time limits.

 (1) Each franchisor shall specify in writing to each of its franchisees licensed as a new motor vehicle dealer in this state:

 (a) the franchisee’s obligations for new motor vehicle preparation, delivery, and warranty service on its products; (b) the schedule of compensation to be paid to the franchisee for parts, work, and service; and (c) the time allowance for the performance of work and service.

 (2) (a) The schedule of compensation described in Subsection (1) shall include reasonable compensation for diagnostic work, as well as repair service, parts, and labor. (b) Time allowances described in Subsection (1) for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. 

(3) (a) In the determination of what constitutes reasonable compensation under this section, the principal factor to be considered is the prevailing wage rates being paid by franchisees in the relevant market area in which the franchisee is doing business.

 (b) Compensation of the franchisee for warranty service work may not be less than the amount charged by the franchisee for like parts and service to retail or fleet customers, if the amounts are reasonable. In the case of a recreational vehicle franchisee, reimbursement for parts used in the performance of warranty repairs, including those parts separately warranted directly to the consumer by a recreational vehicle parts supplier, may not be less than the franchisee’s cost plus 20%. For purposes of this Subsection (3)(b), the term “cost” shall be that same price paid by a franchisee to a franchisor or supplier for the part when the part is purchased for a nonwarranty repair. 

(4) A franchisor may not fail to: (a) perform any warranty obligation; (b) include in written notices of franchisor’s recalls to new motor vehicle owners and franchisees the expected date by which necessary parts and equipment will be available to franchisees for the correction of the defects; or (c) compensate any of the franchisees for repairs effected by the recall. 

(5) If a franchisor disallows a franchisee’s claim for a defective part, alleging that the part is not defective, the franchisor at its option shall: (a) return the part to the franchisee at the franchisor’s expense; or (b) pay the franchisee the cost of the part.

 (6) (a) A claim made by a franchisee pursuant to this section for labor and parts shall be paid within 30 days after its approval. (b) A claim shall be either approved or disapproved by the franchisor within 30 days after receipt of the claim on a form generally used by the franchisor and containing the generally required information. Any claim not specifically disapproved of in writing within 30 days after the receipt of the form is considered to be approved and payment shall be made within 30 days. 

(7) Warranty service audits of franchisee records may be conducted by the franchisor on a reasonable basis. 

(8) A franchisee’s claim for warranty compensation may be denied only if: (a) the franchisee’s claim is based on a nonwarranty repair; (b) the franchisee lacks material documentation for the claim; (c) the franchisee fails to comply materially with specific substantive terms and conditions of the franchisor’s warranty compensation program; or (d) the franchisor has a bona fide belief based on competent evidence that the franchisee’s claim is intentionally false, fraudulent, or misrepresented. 

(9) (a) Any charge backs for warranty parts or service compensation and service incentives shall only be enforceable for the six-month period immediately following the date the payment for warranty reimbursement was made by the franchisor.

 (b) Except as provided in Subsection (9)(c), all charge backs levied by a franchisor for sales compensation or sales incentives arising out of the sale or lease of a motor vehicle sold or leased by a franchisee shall be compensable only if written notice of the charge back is received by the franchisee within six months immediately following the sooner of: (i) the date when the sales incentive program terminates; or (ii) the date when payment for the sales compensation or sales incentive was made by the franchisor to the franchisee. 

(c) (i) Upon an audit, the franchisor shall provide the franchisee automated or written notice explaining the amount of and reason for a charge back. (ii) A franchisee may respond in writing within 30 days after the notice under Subsection (9)(c)(i) to: (A) explain a deficiency; or (B) provide materials or information to correct and cure compliance with a provision that is a basis for a charge back.

 (d) A charge back: (i) may not be based on a nonmaterial error that is clerical in nature; and (ii) (A) shall be based on one or more specific instances of material noncompliance with the franchisor’s warranty compensation program or sales incentive program; and (B) may not be extrapolated from a sampling of warranty claims or sales incentive claims. 

(e) The time limitations of this Subsection (9) do not preclude charge backs for any fraudulent claim that was previously paid. Amended by Chapter 33, 2010 General Session

VERMONT

Title 09 : Commerce And Trade Chapter 108 : Motor Vehicle Manufacturers, Distributors, And Dealers Franchising • § 4086. 

Warranty and predelivery obligations to new motor vehicle dealers (a) Each new motor vehicle manufacturer shall specify in writing to each of its new motor vehicle dealers licensed in this State the dealer’s obligations for predelivery preparation and warranty service on its products, shall compensate the new motor vehicle dealer for such service required of the dealer by the manufacturer, and shall provide the dealer the schedule of compensation to be paid the dealer for parts, work, and service in connection therewith, and the time allowance for the performance of the work and service. 

(b) A schedule of compensation shall not fail to include reasonable compensation for diagnostic work, as well as for repair service and labor. Time allowances for the diagnosis and performance of predelivery and warranty service shall be reasonable and adequate for the work to be performed. The hourly rate paid to a new motor vehicle dealer shall not be less than the rate charged by the dealer to customers for nonwarranty service and repairs. Each manufacturer shall compensate each of its dealers for parts used to fulfill warranty, predelivery, and recall obligations of repair and servicing at amounts not less than the retail amounts customarily charged by the dealer to its retail customers for like parts for nonwarranty work. 

The amounts established by a dealer to its retail customers for labor and like parts for nonwarranty work are deemed to be fair and reasonable compensation; provided, however, a manufacturer may rebut such a presumption by showing that such amount so established is unfair and unreasonable in light of the practices of at least four other franchised motor vehicle dealers in the vicinity offering the same line-make or a similar competitive line-make. A manufacturer may not otherwise recover all or any portion of its costs for compensating its motor vehicle dealers licensed in this State for warranty parts and service either by reduction in the amount due to the dealer or by separate charge, surcharge, or other imposition. 

(c) For purposes of this section, the “retail amounts customarily charged” by the franchisee for parts may be established by submitting to the manufacturer 100 sequential nonwarranty customer-paid service repair orders or 60 days of nonwarranty customer-paid service repair orders, whichever is less in terms of total cost, covering repairs made no more than 180 days before the submission and declaring the average percentage markup. 

The average percentage markup so declared is the retail amount, which goes into effect 30 days following the declaration, subject to audit of the submitted repair orders by the manufacturer and adjustment of the average percentage markup based on that audit. Only retail sales not involving warranty repairs, not involving state inspection, not involving routine maintenance such as changing the oil and oil filter, and not involving accessories may be considered in calculating the average percentage markup. 

A manufacturer may not require a new motor vehicle dealer to establish the average percentage markup by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time-consuming to provide, including part-by-part or transaction-by-transaction calculations. A new motor vehicle dealer may not change the average percentage markup more than two times in one calendar year. Further, the manufacturer shall reimburse the new motor vehicle dealer for any labor performed at the retail rate customarily charged by that franchisee for the same labor when not performed in satisfaction of a warranty, provided the franchisee’s rate for labor not performed in satisfaction of a warranty is routinely posted in a place conspicuous to its service customer.

VIRGINIA

46.2-1571 – Warranty and sales incentive obligations. § 46.2-1571. Warranty and sales incentive obligations. A. Each motor vehicle manufacturer, factory branch, distributor, or distributor branch shall (i) specify in writing to each of its motor vehicle dealers licensed in the Commonwealth the dealer’s obligations for preparation, delivery, and warranty service on its products and (ii)compensate the dealer for warranty parts, service and diagnostic work required of the dealer by the manufacturer or distributor as follows: 

1. Compensation of a dealer for warranty parts, service and diagnostic work shall not be less than the amounts charged by the dealer for the manufacturer’s or distributor’s original parts, service and diagnostic work to retail customers for non warranty service, parts and diagnostic work installed or performed in the dealer’s service department unless the amounts are not reasonable. Warranty parts compensation shall be stated as a percentage of markup, which shall be an agreed reasonable approximation of retail markup and which shall be uniformly applied to all of the manufacturer’s or distributor’s parts unless otherwise provided for in this section. If the dealer and manufacturer or distributor cannot agree on the warranty parts compensation markup to be paid to the dealer, the markup shall be determined by an average of the dealer’s retail markup on all of the manufacturer’s or distributor’s parts as described in subdivisions 2 and 3 of this subsection. 

2. For purposes of determining warranty parts and service compensation paid to a dealer by the manufacturer or distributor, menu-priced parts or services, group discounts, special event discounts, and special event promotions shall not be considered in determining amounts charged by the dealer to retail customers. For purposes of determining labor compensation for warranty body shop repairs paid to a dealer by the manufacturer or distributor, internal and insurance-paid repairs shall not be considered in determining amounts charged by the dealer to retail customers. 

3. Increases in dealer warranty parts and service compensation and diagnostic work compensation, pursuant to this section, shall be requested by the dealer in writing, shall be based on 100 consecutive repair orders or all repair orders over a ninety-day period, whichever occurs first and, in the case of parts, shall be stated as a percentage of markup which shall be uniformly applied to all the manufacturer’s or distributor’s parts. 4. In the case of warranty parts compensation, the provisions of this subsection shall be effective only for model year 1992 and succeeding model years.

 5. If a manufacturer or distributor furnishes a part to a dealer at no costfor use by the dealer in performing work for which the manufacturer ordistributor is required to compensate the dealer under this section, themanufacturer or distributor shall compensate the dealer for the part in thesame manner as warranty parts compensation, less the wholesale costs, forsuch part as listed in the manufacturer’s current price schedules. Amanufacturer or distributor may pay the dealer a reasonable handling feeinstead of the compensation otherwise required by this subsection for specialhigh-performance complete engine assemblies in limited production motorvehicles which constitute less than five percent of model productionfurnished to the dealer at no cost, if the manufacturer or distributorexcludes such special high-performance complete engine assemblies indetermining whether the amounts requested by the dealer for warrantycompensation are consistent with the amounts that the dealer charges itsother retail service customers for parts used by the dealer to performsimilar work. 

6. In the case of service work, manufacturer original parts or partsotherwise specified by the manufacturer or distributor, and parts provided bya dealer either pursuant to an adjustment program as defined in § 59.1-207.34or as otherwise requested by the manufacturer or distributor, the dealershall be compensated in the same manner as for warranty service or parts. This section does not apply to compensation for parts such as components,systems, fixtures, appliances, furnishings, accessories, and features thatare designed, used, and maintained primarily for nonvehicular, residentialpurposes. Warranty and sales incentive audits of dealer records may beconducted by the manufacturer, factory branch, distributor, or distributorbranch on a reasonable basis, and dealer claims for warranty or salesincentive compensation shall not be denied except for good cause, such asperformance of nonwarranty repairs, lack of material documentation, fraud, ormisrepresentation. A dealer’s failure to comply with the specificrequirements of the manufacturer or distributor for processing the claimshall not constitute grounds for the denial of the claim or reduction of theamount of compensation to the dealer as long as reasonable documentation orother evidence has been presented to substantiate the claim. 

Themanufacturer, factory branch, distributor, or distributor branch shall notdeny a claim or reduce the amount of compensation to the dealer for warrantyrepairs to resolve a condition discovered by the dealer during the course ofa separate repair requested by the customer. Claims for dealer compensationshall be paid within thirty days of dealer submission or within thirty daysof the end of an incentive program or rejected in writing for stated reasons.

The manufacturer, factory branch, distributor, or distributor branch shallreserve the right to reasonable periodic audits to determine the validity ofall such paid claims for dealer compensation. Any chargebacks for warrantyparts or service compensation and service incentives shall only be for thesix-month period immediately following the date of the claim and, in the caseof chargebacks for sales compensation only, for the six-month periodimmediately following the date of claim. However, such limitations shall notbe effective if a manufacturer, factory branch, distributor, or distributorbranch has reasonable cause to believe that a claim submitted by a dealer isintentionally false or fraudulent. For purposes of this section, “reasonablecause” means a bona fide belief based upon evidence that the material issuesof fact are such that a person of ordinary caution, prudence, and judgmentcould believe that a claim was intentionally false or fraudulent. A dealershall not be charged back or otherwise liable for sales incentives or chargesrelated to a motor vehicle sold by the dealer to a purchaser other than alicensed, franchised motor vehicle dealer and subsequently exported orresold, unless the manufacturer, factory branch, distributor, or distributorbranch can demonstrate by a preponderance of the evidence that the dealershould have known of and did not exercise due diligence in discovering thepurchaser’s intention to export or resell the motor vehicle. B. It shall be unlawful for any motor vehicle manufacturer, factory branch,distributor, or distributor branch to: 1. Fail to perform any of its warranty obligations, including tires, withrespect to a motor vehicle; 

2. Fail to assume all responsibility for any liability resulting fromstructural or production defects;

 3. Fail to include in written notices of factory recalls to vehicle ownersand dealers the expected date by which necessary parts and equipment will beavailable to dealers for the correction of defects; 

4. Fail to compensate any of the motor vehicle dealers licensed in theCommonwealth for repairs effected by the dealer of merchandise damaged inmanufacture or transit to the dealer where the carrier is designated by themanufacturer, factory branch, distributor, or distributor branch; 

5. Fail to fully compensate its motor vehicle dealers licensed in theCommonwealth for warranty parts, work, and service pursuant to subsection Aeither by reduction in the amount due to the dealer or by separate charge,surcharge, or other imposition by which the motor vehicle manufacturer,factory branch, distributor, or distributor branch seeks to recover its costsof complying with subsection A, or for legal costs and expenses incurred bysuch dealers in connection with warranty obligations for which themanufacturer, factory branch, distributor, or distributor branch is legallyresponsible or which the manufacturer, factory branch, distributor, ordistributor branch imposes upon the dealer; 

6. Misrepresent in any way to purchasers of motor vehicles that warrantieswith respect to the manufacture, performance, or design of the vehicle aremade by the dealer, either as warrantor or co-warrantor;

 7. Require the dealer to make warranties to customers in any manner relatedto the manufacture, performance, or design of the vehicle;

 8. Shift or attempt to shift to the motor vehicle dealer, directly orindirectly, any liabilities of the manufacturer, factory branch, distributoror distributor branch under the Virginia Motor Vehicle Warranty EnforcementAct (§ 59.1-207.9 et seq.), unless such liability results from the act oromission by the dealer; or 

9. Deny any dealer the right to return any part or accessory that the dealerhas not sold within 12 months where the part or accessory was not obtainedthrough a specific order initiated by the dealer but instead was specifiedfor, sold to and shipped to the dealer pursuant to an automated orderingsystem, provided that such part or accessory is in the condition required forreturn to the manufacturer, factory branch, distributor, or distributorbranch, and the dealer returns the part within 30 days of it becomingeligible under this subdivision. 

For purposes of this subdivision, an”automated ordering system” shall be a computerized system thatautomatically specifies parts and accessories for sale and shipment to thedealer without specific order thereof initiated by the dealer. Themanufacturer, factory branch, distributor, or distributor branch shall notcharge a restocking or handling fee for any part or accessory being returnedunder this subdivision. This subdivision shall not apply if the manufacturer,factory branch, distributor, or distributor branch has available to thedealer an alternate system for ordering parts and accessories that providesfor shipment of ordered parts and accessories to the dealer within the sametime frame as the dealer would receive them when ordered through theautomated ordering system. 

C. Notwithstanding the terms of any franchise, it shall be unlawful for anymotor vehicle manufacturer, factory branch, distributor, or distributorbranch to fail to indemnify and hold harmless its motor vehicle dealersagainst any losses or damages arising out of complaints, claims, or suitsrelating to the manufacture, assembly, or design of motor vehicles, parts, oraccessories, or other functions by the manufacturer, factory branch,distributor, or distributor branch beyond the control of the dealer,including, without limitation, the selection by the manufacturer, factorybranch, distributor, or distributor branch of parts or components for thevehicle or any damages to merchandise occurring in transit to the dealerwhere the carrier is designated by the manufacturer, factory branch,distributor, or distributor branch. The dealer shall notify the manufacturerof pending suits in which allegations are made which come within thissubsection whenever reasonably practicable to do so. Every motor vehicledealer franchise issued to, amended, or renewed for motor vehicle dealers inVirginia shall be construed to incorporate provisions consistent with therequirements of this subsection. 

D. On any new motor vehicle, any uncorrected damage or any corrected damageexceeding three percent of the manufacturer’s or distributor’s suggestedretail price as defined in 15 U.S.C. §§ 1231-1233, as measured by retailrepair costs, must be disclosed to the dealer in writing prior to delivery.Factory mechanical repair and damage to glass, tires, and bumpers areexcluded from the three percent rule when properly replaced by identicalmanufacturer’s or distributor’s original equipment or parts. 

Whenever a newmotor vehicle is damaged in transit, when the carrier or means oftransportation is determined by the manufacturer or distributor, or whenevera motor vehicle is otherwise damaged prior to delivery to the new motorvehicle dealer, the new motor vehicle dealer shall: 1. Notify the manufacturer or distributor of the damage within three businessdays from the date of delivery of the new motor vehicle to the new motorvehicle dealership or within the additional time specified in the franchise;and 2. Request from the manufacturer or distributor authorization to replace thecomponents, parts, and accessories damaged or otherwise correct the damage,unless the damage to the vehicle exceeds the three percent rule, in whichcase the dealer may reject the vehicle within three business days. E. If the manufacturer or distributor refuses or fails to authorizecorrection of such damage within ten days after receipt of notification, orif the dealer rejects the vehicle because damage exceeds the three percentrule, ownership of the new motor vehicle shall revert to the manufacturer ordistributor, and the new motor vehicle dealer shall have no obligation,financial or otherwise, with respect to such motor vehicle. Should either themanufacturer, distributor, or the dealer elect to correct the damage or anyother damage exceeding the three percent rule, full disclosure shall be madeby the dealer in writing to the buyer and an acknowledgement by the buyer isrequired. If there is less than three percent damage, no disclosure isrequired, provided the damage has been corrected. 

Predelivery mechanical workshall not require a disclosure. Failure to disclose any corrected damagewithin the knowledge of the selling dealer to a new motor vehicle in excessof the three percent rule shall constitute grounds for revocation of thebuyer order, provided that, within thirty days of purchase, the motor vehicleis returned to the dealer with an accompanying written notice of the groundsfor revocation. In case of revocation pursuant to this section, the dealershall accept the vehicle and refund any payments made to the dealer inconnection with the transaction, less a reasonable allowance for theconsumer’s use of the vehicle as defined in § 59.1-207.11. Nothing in thissection shall be construed to exempt from the provisions of this sectiondamage to a new motor vehicle that occurs following delivery of the vehicleto the dealer. F. If there is a dispute between the manufacturer, factory branch,distributor, or distributor branch and the dealer with respect to any matterreferred to in subsection A, B, or C of this section, either party maypetition the Commissioner in writing, within thirty days after either partyhas given written notice of the dispute to the other, for a hearing. 

Thedecision of the Commissioner shall be binding on the parties, subject torights of judicial review and appeal as provided in Chapter 40 (§ 2.2-4000 etseq.) of Title 2.2. However, nothing contained in this section shall give theCommissioner any authority as to the content or interpretation of anymanufacturer’s or distributor’s warranty. 

A manufacturer, factory branch,distributor, or distributor branch may not collect chargebacks, fully or inpart, either through direct payment or by charge to the dealer’s account, forwarranty parts or service compensation (including service incentives) or forsales incentives or other sales compensation until 40 days following finalnotice of the amount charged to the dealer following all internal processesof the manufacturer, factory, factory branch, distributor, or distributorbranch. 

Within 30 days following receipt of such final notice, the dealer maypetition the Commissioner, in writing, for a hearing. If a dealer requestssuch a hearing, the manufacturer, factory branch, distributor, or distributorbranch may not collect the chargeback, fully or in part, either throughdirect payment or by charge to the dealer’s account, until the completion ofthe hearing and a final decision of the Commissioner concerning the validityof the chargeback. (1988, c. 865, § 46.1-550.5:30; 1989, cc. 365, 727; 1990, c. 250; 1991, c.92; 1992, c. 135; 1993, c. 90; 1994, c. 783; 1995, cc. 421, 477; 1997, c.484; 1998, c. 681; 2001, cc. 80, 89; 2006, cc. 809, 818; 2007, c. 830; 2009,cc. 173, 176; 2010, cc. 284, 318.)

WASHINGTON

RCW 46.96.105 Warranty work.

 (1) Each manufacturer shall specify in its franchise agreement, or in a separate written agreement, with each of its dealers licensed in this state, the dealer’s obligation to perform warranty work or service on the manufacturer’s products. Each manufacturer shall provide each of its dealers with a schedule of compensation to be paid to the dealer for any warranty work or service, including parts, labor, and diagnostic work, required of the dealer by the manufacturer in connection with the manufacturer’s products. The schedule of compensation must not be less than the rates charged by the dealer for similar service to retail customers for nonwarranty service and repairs, and must not be less than the schedule of compensation for an existing dealer as of June 10, 2010. 

(a) The rates charged by the dealer for nonwarranty service or work for parts means the price paid by the dealer for those parts, including all shipping and other charges, increased by the franchisee’s average percentage markup. A dealer must establish and declare the dealer’s average percentage markup by submitting to the manufacturer one hundred sequential customer-paid service repair orders or ninety days of customer-paid service repair orders, whichever is less, covering repairs made no more than one hundred eighty days before the submission. A change in a dealer’s established average percentage markup takes effect thirty days following the submission. A manufacturer may not require a dealer to establish average percentage markup by another methodology. A manufacturer may not require information that the dealer believes is unduly burdensome or time consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations. In calculating the retail rate customarily charged by the dealer for parts and labor, the following work must not be included in the calculation: 

(i) Repairs for manufacturer or distributor special events, specials, or promotional discounts for retail customer repairs;

 (ii) Parts sold at wholesale or at reduced or specially negotiated rates for insurance repairs; 

(iii) Routine maintenance not covered under warranty, such as fluids, filters, and belts not provided in the course of repairs;

(iv) Nuts, bolts, fasteners, and similar items that do not have an individual part number; 

(v) Tires; 

(vi) Batteries and light bulbs; and 

(vii) Vehicle reconditioning. 

(b) A manufacturer shall compensate a dealer for labor and diagnostic work at the rates charged by the dealer to its retail customers for such work and for any documentation work required by the manufacturer to authorize or verify the work including, but not limited to, photographs, paperwork, and electronic data entry. However, a manufacturer is not required to compensate a dealer more than once for the same documentation work. If a manufacturer can demonstrate that the rates unreasonably exceed those of all other franchised motor vehicle dealers in the same relevant market area offering the same or a competitive motor vehicle line, the manufacturer is not required to honor the rate increase proposed by the dealer. If the manufacturer is not required to honor the rate increase proposed by the dealer, the dealer is entitled to resubmit a new proposed rate for labor and diagnostic work. 

(c) A dealer may not be granted an increase in the average percentage markup or labor and diagnostic work rate more than once in one calendar year. 

(2) All claims for warranty work for parts and labor made by dealers under this section must be submitted to the manufacturer within ninety days of the date the work was performed. All claims submitted must be paid by the manufacturer within thirty days following receipt, provided the claim has been approved by the manufacturer. The manufacturer has the right to audit claims for warranty work and to charge the dealer for any unsubstantiated, incorrect, or false claims for a period of nine months following payment. However, the manufacturer may audit and charge the dealer for any fraudulent claims during any period for which an action for fraud may be commenced under applicable state law. 

(3) All claims submitted by dealers on the forms and in the manner specified by the manufacturer shall be either approved or disapproved within thirty days following their receipt. The manufacturer shall notify the dealer in writing of any disapproved claim, and shall set forth the reasons why the claim was not approved. Any claim not specifically disapproved in writing within thirty days following receipt is approved, and the manufacturer is required to pay that claim within thirty days of receipt of the claim. 

(4) A manufacturer may not otherwise recover all or any portion of its costs for compensating its dealers licensed in this state for warranty parts and service either by reduction in the amount due to the dealer or by separate charge, surcharge, or other imposition. [2014 c 214 § 6; 2010 c 178 § 4; 2003 c 21 § 2; 1998 c 298 § 1.]

WEST VIRGINIA

§17A-6A-8a. Compensation to dealers for service rendered. 

(1) Every motor vehicle manufacturer, distributor or wholesaler, factory branch or distributor branch, or officer, agent or representative thereof, shall: (a) Specify in writing to each of its motor vehicle dealers, the dealer’s obligation for delivery, preparation, warranty and factory recall services on its products; (b) Compensate the motor vehicle dealer for warranty and factory recall service required of the dealer by the manufacturer, distributor or wholesaler, factory branch or distributor branch or officer, agent or representative thereof; and (c) Provide the dealer the schedule of compensation to be paid the dealer for parts, work and service in connection with warranty and recall services and the time allowance for the performance of the work and service. 

(2) In no event may: 

(a) The schedule of compensation fail to compensate the dealers for the work and services they are required to perform in connection with the dealer’s delivery and preparation obligations, or fail to adequately and fairly compensate the dealers for labor, parts and other expenses incurred by the dealer to perform under and comply with manufacturer’s warranty agreements and factory recalls; 

(b) Any manufacturer, distributor or wholesaler, or representative thereof, pay its dealers an amount of money for warranty or recall work that is less than that charged by the dealer to the retail customers of the dealer for nonwarranty and nonrecall work of the like kind; and 

(c) Any manufacturer, distributor or wholesaler, or representative thereof, compensate for warranty and recall work based on a flat-rate figure that is less than what the dealer charges for retail work. 

(3) It is a violation of this section for any manufacturer, distributor, wholesaler or representative to require any dealer to pay in any manner, surcharges, limited allocation, audits, charge backs or other retaliation if the dealer seeks to recover its nonwarranty retail rate for warranty and recall work. 

(4) The retail rate charged by the dealer for parts is established by the dealer submitting to the manufacturer or distributor one hundred sequential nonwarranty customer-paid service repair orders that contain warranty-like parts or ninety consecutive days of nonwarranty customer-paid service repair orders that contain warranty-like parts covering repairs made no more than one hundred eighty days before the submission and declaring the average percentage markup. 

(5) The retail rate customarily charged by the dealer for labor rate must be established using the same process as provided under subsection (4) of this section and declaring the average labor rate. The average labor rate must be determined by dividing the amount of the dealer’s total labor sales by the number of total hours that generated those sales. If a labor rate and parts markup rate simultaneously declared by the dealer, the dealer may use the same repair orders to complete each calculation as provided under subsection (4) of this section. A reasonable allowance for labor for diagnostic time shall be either included in the manufacturer’s labor time allowance or listed as a separate compensable item. A dealer may request additional time allowance for either diagnostic or repair time, which request shall not be unreasonable denied by the manufacturer. 

(6) In calculating the retail rate customarily charged by the dealer for parts and labor, the following work may not be included in the calculation: 

(a) Repairs for manufacturer or distributor special events, specials or promotional discounts for retain customer repairs; 

(b) Parts sold at wholesale; 

(c) Routine maintenance not covered under any retail customer warranty, including fluids, filters and belts not provided in the course of repairs; 

(d) Nuts, bolts fasteners and similar items that do not have an individual part number; 

(e) Tires; (f) Vehicle reconditioning. 

(7) The average of the parts markup rates and labor rate is presumed to be reasonable and must go into effect thirty days following the manufacturer’s approval. A manufacturer or distributor may rebut the presumption by a preponderance of the evidence that a rate is unreasonable in light of the practices of all other same line-make franchised motor vehicle dealers in an economically similar area of the state offering the same line-make vehicles, not later than thirty days after submission. If the average parts markup rate or average labor rate is rebutted, or both, the manufacturer or distributor shall propose an adjustment of the average percentage markup based on that rebuttal not later than thirty days after submission. 

(8) Each manufacturer, in establishing a schedule of compensation for warranty work, shall rely on the vehicle dealer’s declaration of hourly labor rates and parts as stated in subsections (4), (5) and (6) of this section and may not obligate any vehicle dealer to engage in unduly burdensome or time-consuming documentation of rates or parts, including obligating vehicle dealers to engage in transaction-by-transaction or part-by-part calculations.

 (9) A dealer or manufacturer may demand that the average parts markup or average labor rate be calculated using the process provided under subsections (4) and (5) of this section; however, the demand for the average parts markup may not be made within twelve months of the last parts markup declaration and the demand for the average labor rate may not be made within twelve months of the last labor rate declaration. If a parts markup or labor rate is demanded by the dealer or manufacturer, the dealer shall determine the repair orders to be included in the calculation under subsections (4) and (5) of this section.

WISCONSIN

218.0125  Warranty reimbursement. 

(1) In this section: (a) “Dealer cost” means the wholesale cost for a part as listed in the manufacturer’s, importer’s or distributor’s current price schedules or, if the part is not so listed, the dealer’s original invoice cost for the part. (b) “Qualifying nonwarranty repairs” means nonwarranty repairs that would be covered by the warranty of a manufacturer, importer, or distributor if the vehicle being repaired was covered by the warranty. The term does not include routine maintenance. 

(2) A manufacturer, importer, or distributor shall, for the protection of the buying public, specify the delivery and preparation obligations of its dealers before delivery of new motor vehicles to retail buyers. Except for a manufacturer, importer, or distributor of motorcycles with respect to a dealer of the manufacturer’s, importer’s, or distributor’s motorcycles, the specification shall be in writing. A copy of the delivery and preparation obligations of its dealers shall be filed with the department of transportation by every licensed motor vehicle manufacturer, importer, or distributor and shall constitute the dealer’s only responsibility for product liability as between the dealer and the manufacturer, importer, or distributor. Any mechanical, body, or parts defects arising from any warranties of the manufacturer, importer, or distributor shall constitute the manufacturer’s, importer’s, or distributor’s product or warranty liability. (2m) A manufacturer, importer, or distributor of motorcycles with respect to a dealer of the manufacturer’s, importer’s, or distributor’s motorcycles shall reasonably compensate any authorized dealer who performs work to rectify the manufacturer’s, importer’s, or distributor’s product or warranty defects or delivery and preparation obligations or who performs any other work required, requested, or approved by the manufacturer, importer, or distributor or for which the manufacturer, importer, or distributor has agreed to pay, including compensation for labor at a labor rate equal to the effective labor rate charged all customers and for parts at an amount not less than the amount the dealer charges its other retail service customers for parts used in performing similar work by the dealer. 

(3) To be eligible for compensation for parts under sub. (2m), a dealer of motorcycles shall notify the manufacturer, importer, or distributor of motorcycles in writing of the amounts that the dealer charges its other retail service customers for parts and request that it be paid for parts in accordance with this section. The notice may be limited to the dealer’s average markup over dealer cost that the dealer charges its other retail service customers for parts used to perform similar work. The notice shall be served upon the manufacturer, importer, or distributor not less than 30 days before the date on which the dealer requests that the manufacturer, importer, or distributor begin paying the dealer for parts at the stated amounts. The manufacturer, importer, or distributor shall pay the dealer, as provided in this section, at the amounts stated in the dealer notice for parts used in work performed on and after the beginning date stated in the notice. This section applies to a manufacturer, importer, or distributor of motorcycles with respect to a dealer of the manufacturer’s, importer’s, or distributor’s motorcycles and those dealers. (3m)  (a) Subject to sub. (4m), a manufacturer, importer, or distributor, except a manufacturer, importer, or distributor of motorcycles with respect to a dealer of the manufacturer’s, importer’s, or distributor’s motorcycles, shall reasonably compensate a dealer who performs work to rectify the product or warranty defects of the manufacturer, importer, or distributor or to satisfy delivery and preparation obligations of the manufacturer, importer, or distributor or who performs any other work required, requested, or approved by the manufacturer, importer, or distributor or for which the manufacturer, importer, or distributor has agreed to pay. (b) Reasonable compensation under par. (a) for labor is equal to the dealer’s effective nonwarranty labor rate multiplied by the number of hours allowed for the repair under the manufacturer’s, importer’s, or distributor’s time allowances used in compensating the dealer for warranty work. Reasonable compensation under par. (a) for parts is equal to the dealer’s cost for the parts multiplied by the sum of 1 and the dealer’s average percentage markup over dealer cost for parts. (c) 1. The effective nonwarranty labor rate is determined, using the submitted substantiating orders under sub. (4m) (a) 2., by dividing the total customer labor charges for qualifying nonwarranty repairs in the repair orders by the total number of hours that would be allowed for the repairs if the repairs were made under the manufacturer’s, importer’s, or distributor’s time allowances used in compensating the dealer for warranty work. 2. A dealer’s average percentage markup over dealer cost for parts is determined, using the submitted substantiating orders under sub. (4m) (a) 2., by dividing total charges for parts in the repair orders by the total dealer cost for the parts.

 (4) The manufacturer, importer, or distributor of motorcycles with respect to a dealer of the manufacturer’s, importer’s, or distributor’s motorcycles may require the dealer, at reasonable intervals, to provide the manufacturer, importer, or distributor with documents or information regarding a reasonable number of sales to other retail service customers of parts used by the dealer to perform similar work in order to substantiate that the amounts requested in the dealer’s notice are consistent with the amounts that the dealer charges its other retail service customers for parts used by the dealer to perform similar work. (4m)  (a) To be eligible for compensation for labor or parts under sub. (3m), a dealer shall submit to the manufacturer, importer, or distributor all of the following: 1. A written notice of the claimed effective nonwarranty labor rate or average percentage markup over dealer cost for parts. 2. Either 100 sequential repair orders for qualifying nonwarranty repairs or all repair orders for qualifying nonwarranty repairs performed in a 90-day period, whichever is less. All repair orders under this subdivision must be for repairs made no more than 180 days before the submission. (b) Not more than 30 days after receiving a submission under par. (a), the manufacturer, importer, or distributor shall begin compensating the dealer based on the effective nonwarranty labor rate or average percentage markup over dealer cost for parts that is substantiated by the submission. If the manufacturer, importer, or distributor disputes the dealer’s claimed labor rate or markup, the manufacturer, importer, or distributor shall notify the dealer in writing that it disputes the labor rate or markup. A notice under this paragraph shall include a written explanation of the reason for the dispute, including the labor rate or markup that the manufacturer, importer, or distributor has determined is substantiated by the submission. 

(5) A manufacturer, importer, or distributor who fails to compensate a dealer for parts at an amount not less than the amount the dealer charges its other retail service customers for parts used to perform similar work shall not be found to have violated this section if the manufacturer, importer, or distributor shows that, for a manufacturer, importer, or distributor of motorcycles with respect to a dealer of the manufacturer’s, importer’s, or distributor’s motorcycles, the amount is not reasonably competitive to the amounts charged to retail service customers by other similarly situated franchised motor vehicle dealers in this state for the same parts when used by those dealers to perform similar work or, for any other manufacturer, importer, or distributor, the amount is not reasonably competitive to the amounts charged to retail service customers by other similarly situated franchised motor vehicle dealers in this state in performing qualifying nonwarranty repairs.

 (6) If a manufacturer, importer or distributor furnishes a part to a dealer at no cost for use by the dealer in performing work for which the manufacturer, importer or distributor is required to compensate the dealer under this section, the manufacturer, importer or distributor shall compensate the dealer for the part at an amount not less than the amount the dealer charges its other retail customers for parts when used to perform similar work less the wholesale cost for the furnished part as listed in the manufacturer’s current price schedules. A manufacturer, importer or distributor may pay the dealer a reasonable handling fee instead of the compensation otherwise required by this section for special high-performance complete engine assemblies furnished to the dealer at no cost, provided that the manufacturer, importer or distributor excludes special high-performance complete engine assemblies in determining whether the amounts requested in the dealer’s notice are consistent with the amounts that the dealer charges its other retail service customers for parts used by the dealer to perform similar work. 

(7) A claim made by a franchised motor vehicle dealer for compensation under this section shall be either approved or disapproved within 30 days after the claim is submitted to the manufacturer, importer or distributor in the manner and on the forms the manufacturer, importer or distributor reasonably prescribes. An approved claim shall be paid within 30 days after its approval. If a claim is not specifically disapproved in writing or by electronic transmission within 30 days after the date on which the manufacturer, importer or distributor receives it, the claim shall be considered to be approved and payment shall follow within 30 days. A manufacturer, importer or distributor retains the right to audit claims for a period of one year after the date on which the claim is paid and to charge back any amounts paid on claims that are false or unsubstantiated. If there is evidence of fraud, this subsection does not limit the right of the manufacturer to audit for longer periods and charge back for any fraudulent claim, subject to the limitations period under s. 893.93 (1) (b). History: 1999 a. 31 ss. 114 to 121; 2011 a. 91.

WYOMING

40 20 119. Reimbursement for warranty work. 

(a) If a dealer submits a warranty claim to a supplier while the dealer agreement is in effect or within sixty (60) days after the termination of the dealer agreement and if the claim is for work performed before the termination or expiration of the dealer agreement, the supplier shall accept or reject the warranty claim by written notice to the dealer within thirty (30) days after the supplier’s receipt of the claim. If the supplier does not reject the warranty claim in the time period specified above, the claim shall be deemed accepted. If the supplier accepts the warranty claim, the supplier shall pay or credit to the dealer’s account all amounts owed with respect to the claim to the dealer within thirty (30) days after it is accepted. If the supplier rejects a warranty claim, the supplier shall give the dealer written or electronic notice of the grounds for rejection, which reasons shall be consistent with the supplier’s reasons for rejecting warranty claims of other dealers, both in their terms and manner of enforcement. If no grounds for rejection are given, the claim shall be deemed accepted. 

(b) Any claim which 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 (30) days of receipt by the dealer of the supplier’s notification of the disapproval. 

(c) Warranty work performed by the dealer shall be compensated in accordance with the reasonable and customary amount of time required to complete the work, expressed in hours and fractions multiplied by the dealer’s established customer hourly retail labor rate, which shall have previously been made known to the supplier. Parts used in warranty repair work shall be reimbursed at the current net price plus fifteen percent (15%). 

(d) For purposes of this chapter, any repair work or installation of replacement parts performed with respect to the dealer’s equipment in inventory or equipment of the dealer’s customers at the request of the supplier, including work performed pursuant to a product improvement program, shall be deemed to create a warranty claim for which the dealer shall be paid pursuant to this section.

 (e) A supplier may audit warranty claims submitted by its dealers for a period of up to one (1) year following payment of the claims, and may charge back to its dealers any amounts paid based upon claims shown by the audit to be misrepresented. If a warranty claim is misrepresented, then warranty claims submitted within the three (3) year period ending with the date a claim is shown by the audit to be misrepresented may be audited. 

(f) The requirements of subsections (a) through (c) of this section apply to all warranty claims submitted by a dealer to a supplier in which the dealer has complied with the supplier’s reasonable policies and procedures for warranty reimbursement. A supplier’s warranty reimbursement policies and procedures shall be deemed unreasonable to the extent they conflict with any of the provisions of this section.

 (g) A dealer may choose to accept alternate reimbursement terms and conditions in lieu of the requirements of subsections (a) through (c) of this section if there is a written dealer agreement between the supplier and the dealer that requires the supplier to compensate the dealer for warranty labor costs either as:

 (i) A discount in the pricing of the equipment to the dealer; or (ii) A lump sum payment to the dealer that is made to the dealer within ninety (90) days of the sale of the supplier’s new equipment. 

(h) The discount or lump sum described in subsection (g) of this section shall be no less than five percent (5%) of the suggested retail price of the equipment. If the requirements of subsections (g) and (h) of this section are met and alternate terms and conditions are in place, subsections (a) through (c) of this section do not apply and the alternate terms and conditions are enforceable. Nothing contained in this subsection or subsection (g) of this section shall be deemed to effect the supplier’s obligation to reimburse the dealer for parts in accordance with subsection (c) of this section.