Chapter 407 Merchandising Practices
407.826. 1. (1) A franchisor shall be prohibited from owning or operating a new motor vehicle dealership in this state. It is not a violation of this section for a franchisor to own or operate a new motor vehicle dealership:
(a) For a temporary period of not more than twenty-four months if the dealership is for sale at a reasonable price and on reasonable terms and conditions to an independent qualified buyer. On showing by a franchisor of good cause, the time limit set forth above may be extended for an additional period of up to twelve months; or
(b) In a bona fide relationship with an independent person (i) who is required to make a significant investment in the new motor vehicle dealership subject to loss and (ii) operates the dealership and can reasonably expect to acquire full ownership of the dealership within a reasonable time and under reasonable terms and conditions.
(2) Nothing in this section shall be deemed to prohibit a franchisor from owning a minority interest in an entity that owns motor vehicle dealerships of the same line-make manufactured and franchised by the factory, provided that all of the following conditions are met at the time of acquisition and continue to be met during the time the entity maintains ownership:
(a) The interest owned by the factory in said entity shall not exceed forty-five percent of the total ownership;
(b) Any dealership in which the entity owns an interest shall be no less than nine miles of any unaffiliated new motor vehicle dealership trading in the same line-make of vehicle;
(c) All of the licensed dealerships for the sale of such factory's new motor vehicle in the state trade exclusively in the factory's line-make;
(d) During any period in which the entity has such ownership interest, the factory shall have no more than four franchise agreements governing such line-make with dealers licensed to do business in this state;
(e) All the factory's franchise agreements confer rights on the franchisee of the line-make to develop and operate, within a defined geographic territory or area, as many dealership facilities as the franchisee and factory shall agree are appropriate;
(f) At the time the entity first acquires an ownership interest, not fewer than seventy-five percent of the franchisees of the line-make within this state own and operate two or more dealership facilities in the geographic territory or area covered by the franchise agreement with the factory;
(g) As of January 1, 2001, there were no more than ten dealerships of such line-make licensed as a new motor vehicle dealer in this state; and
(h) Prior to August 28, 2001, the factory has been continuously engaged, at least since July 1, 1998, in the retail sale of motor vehicles of its own line-make through direct or indirect ownership of dealerships in at least five states.
2. A franchisor shall not sell new motor vehicles directly to any retail consumer except through a franchisee for the line-make that includes the new motor vehicle unless such consumer is an employee of the franchisor, or is a not-for-profit organization or an agency of the federal, state or local governments. This subsection shall not preclude a franchisor from providing information to consumers for the purpose of marketing or facilitating the sale of a new motor vehicle or from establishing programs to sell or offer to sell new motor vehicles through participating franchisees.
3. The remedies and relief available pursuant to section 407.835 shall apply to this section.
(L. 2001 H.B. 575)