Article 1. Applicability; Jurisdiction; Venue; Corporate Affiliates.
Chapter 25. Motor Vehicle Transactions.
Sec. 45.25.010. Applicability.
AS 45.25.020 — 45.25.310 apply to franchise agreements between a manufacturer and its new motor vehicle dealers in this state.
Sec. 45.25.020. Jurisdiction; venue.
(a) The courts of this state have jurisdiction over a legal dispute between a manufacturer located in or outside this state and a new motor vehicle dealer located in this state, and the dispute is governed by and interpreted and adjudicated under the law of this state.
(b) Venue for a dispute under (a) of this section is in the judicial district of this state where the new motor vehicle dealer's principal place of business is located.
Sec. 45.25.030. Corporate affiliates.
(a) A manufacturer may not use a subsidiary corporation, affiliated corporation, partnership, association, or other person to accomplish what would be prohibited for the manufacturer under this chapter.
(b) This section does not limit the right of a person included within the scope of this section to engage in reasonable and appropriate business practices consistent with an existing trade practice that is not prohibited by this chapter.
Article 2. Franchise Agreements.
Sec. 45.25.100. Consistency with state law.
The terms and conditions in an agreement between a manufacturer and a new motor vehicle dealer in this state, including a motor vehicle franchise agreement, that are inconsistent with the law of this state do not have any force or effect in this state.
Sec. 45.25.110. Termination of franchise agreements.
(a) A manufacturer may not terminate a franchise agreement with a new motor vehicle dealer unless
(1) the manufacturer has
(A) complied with the notice requirements of this chapter; and
(B) shown that there is good cause for the termination of the franchise agreement, and, if the reasons underlying the good cause can be corrected by the new motor vehicle dealer, the new motor vehicle dealer has failed for 120 days after delivery of the notice required by
AS 45.25.120 to make the corrections; the circumstances identified under
AS 45.25.120(a)(2) for which a 15-day notice of termination is required do not qualify as reasons for which correction is allowed under this subparagraph; or
(2) the new motor vehicle dealer has systematically engaged in fraud against consumers or the manufacturer or in the operation of the new motor vehicle dealership.
(b) Notwithstanding (a)(1) of this section, a manufacturer may not terminate a franchise agreement with a new motor vehicle dealer because of the death or incapacity of an owner if the owner is not listed in the franchise as one on whose expertise and abilities the manufacturer relied in the granting of the franchise.
(c) A failure of a new motor vehicle dealer under (a) of this section that relates to the performance of the new motor vehicle dealer in sales, service, or level of customer satisfaction does not amount to good cause under this section if the new motor vehicle dealer failed to comply and the failure to comply was caused by
(1) an insufficient supply of new motor vehicles; or
(2) market, economic, or other factors that exist within the new motor vehicle dealer's relevant market area and that were beyond the control of the new motor vehicle dealer.
(d) In this section, “good cause” includes when the new motor vehicle dealer fails to comply with or observe a material provision of the franchise agreement. For the purposes of determining good cause under this subsection, reasonable sales and service performance criteria and capital and facility requirements may be considered material provisions only if the criteria or requirements were communicated in writing to the new motor vehicle dealer within a reasonable period before the effective date of the termination or nonrenewal so that a reasonable opportunity was afforded over a period of not less than six months to comply with the criteria or requirements.
Sec. 45.25.120. Notice of termination.
(a) A manufacturer shall furnish a notice of termination of a franchise agreement to a new motor vehicle dealer at least
(1) 90 days before the effective date of a termination, except as required under (2) or (3) of this subsection;
(2) 15 days before the effective date of a termination when the new motor vehicle dealer
(A) is insolvent or is the subject of a bankruptcy or receivership proceeding;
(B) has failed to conduct its customary sales and service operations during its customary business hours for seven consecutive business days; this subparagraph does not apply to closures due to acts of God or circumstances beyond the direct control of the new motor vehicle dealer; or
(C) is convicted of a felony involving moral turpitude or fraud under the law of this state, another state, the federal government, a territory of the United States, or the District of Columbia;
(3) 180 days before the effective date of the termination if the manufacturer or distributor is discontinuing the sale of the product line.
(b) Notice required under (a) of this section must be in writing, shall be sent by certified mail or personally delivered to the new motor vehicle dealer, and must contain
(1) a statement of intention to terminate the franchise;
(2) a statement of the reasons for the termination; and
(3) the date on which the termination takes effect.
Sec. 45.25.130. Threat of termination.
(a) A manufacturer or manufacturer representative may not coerce or attempt to coerce a new motor vehicle dealer to enter into an agreement with the manufacturer or a subsidiary of the manufacturer, or to do any other act unfair to the new motor vehicle dealer, by threatening to terminate a franchise agreement between the manufacturer or subsidiary of the manufacturer and the new motor vehicle dealer.
(b) This section does not prohibit a voluntary agreement between a manufacturer and a new motor vehicle dealer or between a distributor and a new motor vehicle dealer to settle legitimate disputes.
Sec. 45.25.140. Repurchase obligations on termination.
(a) Upon the termination of a new motor vehicle dealer's franchise agreement by the manufacturer or distributor, the manufacturer or distributor shall repurchase from the new motor vehicle dealer at
(1) the new motor vehicle dealer's net acquisition cost, if the motor vehicles have not been materially altered or damaged, all inventory consisting of unsold new motor vehicles that are current models;
(2) the new motor vehicle dealer's net acquisition cost, new motor vehicle models from the previous year that have been acquired from the manufacturer within the past two years before receipt of the notice of termination, but an adjustment based on mileage over 500 miles may be made;
(3) the new motor vehicle dealer price listed in the current manufacturer's parts catalog, less applicable allowances, new unused undamaged parts in their original, unbroken packaging and acquired from the manufacturer or distributor;
(4) fair market value, signs, equipment, and furnishings that bear the manufacturer's trademark or trade name, that have not been altered or damaged, and that were required by the manufacturer or distributor within five years preceding the notice of termination;
(5) the new motor vehicle dealer's net acquisition cost, special tools that have not been altered or materially damaged and that were purchased from the manufacturer or distributor within three years preceding the date of the termination; and
(6) the lesser of the fair market value or the depreciated value, all manufacturer required computers, printers, and other electronic hardware, and electronic software, except that, if the new motor vehicle dealer leases the computers, printers, or other electronic hardware, or electronic software, the manufacturer shall pay the new motor vehicle dealer the amount of money that is required for the new motor vehicle dealer to terminate the lease under the lease agreement.
(b) Within 90 days after the effective date of the termination, the new motor vehicle dealer shall return the property required by (a) of this section to be repurchased to the manufacturer or distributor at the manufacturer's or distributor's expense. The manufacturer or distributor shall pay the compensation for the property within 60 days after the tender of inventory and other items if the new motor vehicle dealer has clear title to the property and is in a position to convey that title to the manufacturer or distributor. If the property is subject to a security interest, the manufacturer or distributor may make payment jointly to the new motor vehicle dealer and the holder of the security interest, and the manufacturer or distributor may offset these payments.
Sec. 45.25.150. Required compensation for new motor vehicle dealer facilities.
(a) Upon termination by the manufacturer or distributor, the manufacturer or distributor shall compensate the new motor vehicle dealer for new motor vehicle dealer facilities a sum equivalent to the
(1) rent for the unexpired term of the lease or 18 months, whichever period is shorter, if the new motor vehicle dealer is leasing the new motor vehicle dealership facilities from a lessor other than the manufacturer or distributor; or
(2) reasonable rental value of the new motor vehicle dealership facilities for 18 months or until the facilities are leased or sold, whichever period is shorter, if the new motor vehicle dealer owns the new motor vehicle dealership facilities; the sum may be paid in monthly installments at the election of the manufacturer or distributor.
(b) This section does not relieve a new motor vehicle dealer of the obligation to mitigate
(1) damages under a lease, prevent a manufacturer from occupying and using the new motor vehicle dealer's facilities while paying rent, or preclude a manufacturer from negotiating a lease termination, sublease, or new lease; or
(2) the costs of the relocation, substantial alteration, and remodeling of the new motor vehicle dealer's facilities for which payments are required under (f) of this section.
(c) This section does not apply to a termination for
(1) insolvency of the new motor vehicle dealer or the filing of any petition by or against the new motor vehicle dealer under a bankruptcy or receivership law;
(2) failure of the new motor vehicle dealer to conduct its customary sales and service operations during its customary business hours for seven consecutive business days;
(3) conviction of the new motor vehicle dealer or its principal owners of a felony or a misdemeanor regardless of the punishment if the crime involves theft, dishonesty, or false statement;
(4) revocation of a license required for the new motor vehicle dealer to operate; or
(5) a fraudulent misrepresentation by the new motor vehicle dealer to the manufacturer or distributor that is material to the new motor vehicle dealer's agreement.
(d) The payment required under (a) of this section is only required to the extent that the facilities were used for activities under the franchise agreement and only to the extent the facilities were not leased for unrelated purposes.
(e) If payment under (a) of this section is made, the manufacturer or distributor is entitled to possession and use of the new motor vehicle dealership facilities for the period for which the payment is paid.
(f) In addition to the payment required under
AS 45.25.140 and (a) of this section, upon termination of a franchise agreement by the manufacturer under this chapter, the manufacturer shall, at the request and option of the new motor vehicle dealer, pay the new motor vehicle dealer the new motor vehicle dealer's cost for a relocation, substantial alteration, or remodeling of the new motor vehicle dealer's facilities to the extent used for the manufacturer's franchise, if
(1) the manufacturer required the relocation, substantial alteration, or remodeling of the new motor vehicle dealer's facilities for a continuation or renewal of the franchise agreement; and
(2) the relocation, substantial alteration, or remodeling of the new motor vehicle dealer's facilities was completed within three years before the termination or is in process when the new motor vehicle dealer receives the notice of termination.
Sec. 45.25.160. Prevention of or refusal to honor transfer of new motor vehicle dealership ownership.
(a) A manufacturer may not unreasonably prevent or refuse to honor the transfer of ownership of a new motor vehicle dealership to a buyer who is capable of being licensed as a new motor vehicle dealer in this state and who meets the standards established by the manufacturer, if the standards are reasonable and applied uniformly.
(b) Within 30 days after receipt of a written request from a new motor vehicle dealer for transfer of the ownership of a new motor vehicle dealership, a manufacturer may request, and the new motor vehicle dealer shall promptly provide, supplementary information that is reasonably necessary for the manufacturer to determine whether the manufacturer will approve the request for the transfer. If a manufacturer refuses to approve the transfer, the manufacturer shall give written notice to the new motor vehicle dealer of the refusal. The manufacturer shall give the notice to the new motor vehicle dealer within 75 days after the date the manufacturer has received both the written transfer request and supplementary information requested under this subsection. The notice must state the specific grounds for the refusal to approve the transfer. The manufacturer shall give the notice under this subsection by personal service or certified mail with return receipt requested. If the manufacturer does not give the notice within the time allowed under this subsection and does not exercise a right of first refusal under (c) of this section, the request shall be considered approved.
(c) A manufacturer or distributor may exercise a contractual right of first refusal with respect to the proposed sale or other transfer of the interest of the dealer in a new motor vehicle dealership if
(1) the sale or other transfer is to a person who is not a family member of an owner of the dealership, a managerial employee of the dealership owning 15 percent or more of the dealership, or a corporation, partnership, or other legal entity owned by the existing owners of the dealership; in this paragraph, “family member” means
(A) the spouse of an owner of the dealership;
(B) the child, stepchild, grandchild, brother, sister, or parent of an owner of the dealership; or
(C) a spouse of a person identified in (B) of this paragraph;
(2) the manufacturer or distributor notifies the new motor vehicle dealer in writing of the intent to exercise the right of first refusal; within 30 days after receipt of a written request from a new motor vehicle dealer for transfer of the ownership of a new motor vehicle dealership, a manufacturer or distributor may request, and the new motor vehicle dealer shall promptly provide, related information generally used by a manufacturer or distributor to conduct its review of a proposed intent to exercise the right of first refusal and supplementary information that is reasonably necessary for the manufacturer or distributor to determine whether the manufacturer or distributor will exercise the right of first refusal; if the manufacturer or distributor decides to exercise the right of first refusal, the manufacturer or distributor shall give written notice to the new motor vehicle dealer of the decision within 75 days after receiving the completed transfer request, related information, and requested supplementary information; the manufacturer or distributor shall give the notice under this paragraph by personal service or certified mail with return receipt requested; if the manufacturer or distributor fails to notify the dealer within the 75-day period that the manufacturer or distributor will exercise the right of first refusal, the manufacturer or distributor may not exercise the right of first refusal;
(3) the exercise of the right of first refusal provides to the new motor vehicle dealer the same compensation as, or greater compensation than, the new motor vehicle dealer had negotiated to receive from the proposed buyer or other transferee; and
(4) the manufacturer or distributor agrees to pay the reasonable expenses, including reasonable attorney and accountant fees that do not exceed the usual, customary, and reasonable fees charged for similar work done in the state for other clients, incurred before the manufacturer or distributor exercised its right of first refusal by the proposed buyer or transferee to negotiate and implement the terms of the contract for the sale or transfer.
Sec. 45.25.170. Succession.
(a) A manufacturer or distributor may not prevent or refuse to honor the succession to a new motor vehicle franchise of an heir or devisee under a will of a franchisee, under a written instrument filed with the manufacturer or distributor designating any person as the successor franchisee, or under
AS 13.06 —
AS 13.36 (Uniform Probate Code), except that
(1) a designated successor must, within 60 days after the owner's death or incapacity, give the manufacturer or distributor written notice of the intent to succeed, and the designee must agree to be bound by all the terms and conditions of the current franchise agreement;
(2) the manufacturer or distributor may request from the designated successor personal and financial data that are reasonably necessary to determine the qualifications of the designated successor; the designated successor shall provide the information within 60 days after receiving the request;
(3) the manufacturer or distributor may not unreasonably withhold approval of the succession; if the manufacturer or distributor refuses to honor the succession, the manufacturer or distributor shall send written notice to the proposed successor within 60 days after receiving the information requested in (2) of this subsection or within 60 days after receiving the notice of the proposed successor's intent to succeed, whichever is later.
(b) The notice required by (a)(3) of this section must state the specific grounds for not approving the proposed successor. Within 30 days after the proposed successor's receipt of the notice, the proposed successor may file a protest with the superior court to determine whether the manufacturer or distributor has unreasonably withheld approval.
(c) This section does not preclude the owner of a new motor vehicle dealership from filing with the manufacturer or distributor a written instrument designating any person as a successor. If there are competing successors, the written instrument governs who may submit a proposal as a successor.
Sec. 45.25.180. New dealerships.
(a) Before a manufacturer or distributor enters into a franchise establishing or relocating a new motor vehicle dealer within a relevant market area where the same line make is represented, the manufacturer or distributor shall give 90 days' written notice to each new motor vehicle dealer of the same line make in the relevant market area of the intention to establish an additional new motor vehicle dealer or to relocate an existing new motor vehicle dealer within that relevant market area.
(b) Within 30 days after receiving the notice required under (a) of this section or within 30 days after the end of any appeal procedure provided by the manufacturer or distributor, a new motor vehicle dealer may bring a declaratory judgment action in the superior court of this state to determine whether good cause exists for the establishment or relocation of a proposed new motor vehicle dealer. If an action is filed, the manufacturer or distributor may not establish or relocate the proposed new motor vehicle dealer until the court has rendered a decision on the matter.
(c) This section does not prohibit
(1) the relocation of an existing new motor vehicle dealer to a new location not within four miles of an existing new motor vehicle dealer;
(2) the appointment of a successor new motor vehicle dealer at the same location as its predecessor or within a two-mile radius from any boundary of the predecessor's former location within two years from the date when the predecessor ceased operations or was terminated, whichever occurred later; or
(3) the entering into of a renewal of, replacement of, or succeeding franchise agreement with an existing new motor vehicle dealer whose operations will continue at the existing new motor vehicle dealer's current location.
(d) When determining whether good cause exists for establishing or relocating an additional new motor vehicle dealer for the same line make, the superior court shall consider the existing circumstances, including
(1) whether the establishment of an additional franchise or relocation of the existing new motor vehicle dealer appears to be warranted by economic and marketing conditions, including anticipated future changes;
(2) the retail sales and service business transacted by the protesting new motor vehicle dealer and other new motor vehicle dealers of the same line make with a place of business in the relevant market area to be served by the additional franchise or proposed new location of an existing new motor vehicle dealer during the three-year period immediately preceding the notice;
(3) the investment necessarily made and obligations incurred by the protesting new motor vehicle dealer to perform the protesting new motor vehicle dealer's obligations under existing franchise agreements;
(4) the permanency of the investment of the protesting new motor vehicle dealer;
(5) whether it is beneficial or injurious to the public welfare for an additional franchise to be established or for the existing new motor vehicle dealer to be relocated;
(6) whether the manufacturer has denied the manufacturer's existing new motor vehicle dealer of the same line make the opportunity for reasonable growth, market expansion, or relocation; and
(7) whether the proposed relocation is farther away from the protesting new motor vehicle dealer.
(e) Under this section, a manufacturer has the burden of proving that good cause exists for permitting the proposed establishment or relocation of a new motor vehicle dealer that the manufacturer has proposed, and the new motor vehicle dealer has the burden of proving that good cause exists for permitting the proposed establishment or relocation of a new motor vehicle dealer that the new motor vehicle dealer has proposed.
(f) In this section,
(1) “relevant market area” means the greater of the area
(A) within a radius of 14 miles around an existing new motor vehicle dealer; or
(B) of responsibility defined in a governing franchise agreement;
(2) “relocate” and “relocation” do not include the relocation of a new motor vehicle dealer within two miles of the new motor vehicle dealer's established place of business.
Sec. 45.25.190. Arbitration.
In a controversy between a manufacturer and a new motor vehicle dealer under
AS 45.25.010 — 45.25.310, neither the manufacturer nor the new motor vehicle dealer is required to submit the controversy to arbitration. If both the manufacturer and the new motor vehicle dealer agree to submit a controversy under
AS 45.25.010 — 45.25.310 to arbitration, the arbitration shall be conducted under
AS 09.43.010 — 09.43.180 (Uniform Arbitration Act) or
AS 09.43.300 — 09.43.595 (Revised Uniform Arbitration Act), as applicable, the manufacturer and the new motor vehicle dealer shall each select one arbitrator, and both the manufacturer and the new motor vehicle dealer shall select the third arbitrator.
Sec. 45.25.200. Payment and approval of claims.
(a) A manufacturer shall pay a new motor vehicle dealer for all warranty work. The manufacturer may not deny a claim for warranty work to resolve a condition discovered and properly repaired by the dealer during the course of a separate repair, if the dealer provides the required documentation demonstrating the need for the repair. A manufacturer shall pay the new motor vehicle dealer for the approved warranty repairs in accordance with the schedule of compensation that applies to the repairs when the new motor vehicle dealer makes the repairs.
(b) A new motor vehicle dealer shall submit a claim for warranty work to the manufacturer within 90 days after the new motor vehicle dealer completes the work on the new motor vehicle. The new motor vehicle dealer shall submit the claim in the manner that the manufacturer requires.
(c) Within 30 days after the manufacturer receives a claim from a new motor vehicle dealer under (b) of this section, the manufacturer shall approve or disapprove the claim in writing or electronically. If a manufacturer does not disapprove a claim as required by this subsection, the claim is considered approved. The manufacturer shall pay the claim within 30 days after the approval of the claim.
(d) If a manufacturer disapproves a claim that the new motor vehicle dealer submits under (b) of this section, a manufacturer shall notify the new motor vehicle dealer in writing or electronically and shall state the reasons for disapproving the claim. A new motor vehicle dealer may correct and resubmit the claim within 30 days after the new motor vehicle dealer receives the written or electronic notice that the manufacturer disapproved the claim.
(e) A manufacturer may not initiate or conduct an audit to determine the validity of paid claims for new motor vehicle dealer warranty work unless the manufacturer initiates the audit within one year after the payment of the claim. The manufacturer may not perform more than one audit in a calendar year to determine the validity of paid claims for new motor vehicle dealer warranty work.
(f) A manufacturer may not initiate or conduct an audit to determine the validity of paid incentive claims unless the manufacturer initiates the audit within one year after the payment of the claim or the conclusion of the incentive program, whichever event occurs later. The manufacturer may not perform more than one audit in a calendar year to determine the validity of paid incentive claims.
(g) Notwithstanding the limitations under (e) and (f) of this section, if a manufacturer reasonably suspects fraud, the manufacturer may audit a dealer for fraudulent claims during any period in which an action for fraud may be commenced under applicable state law.
Sec. 45.25.210. Rates and time allowances for warranty and other work.
(a) A manufacturer shall provide each of its new motor vehicle dealers with the schedule of compensation that the manufacturer shall pay to the new motor vehicle dealer for warranty work that the manufacturer requires the new motor vehicle dealer to perform for the manufacturer's products.
(b) The schedule of compensation must include compensation for parts and labor and must comply with this section. The compensation for parts must include the average retail percentage markup that the new motor vehicle dealer charges. The compensation for labor must include the rates and time allowances for warranty work.
(c) Unless otherwise agreed to by the manufacturer and the new motor vehicle dealer, the schedule of compensation may not contain
(1) rates less than the rates that the new motor vehicle dealer charges retail customers for similar nonwarranty service work; and
(2) time allowances less than time allowances provided in independent labor time guides.
(d) To establish the retail percentage markup, the new motor vehicle dealer shall submit to the manufacturer 100 sequential chronologically issued retail service repair orders paid by customers for warranty-like repairs, or 90 consecutive days of retail service repair orders paid by customers for warranty-like repairs, whichever number of retail service repair orders is less. The retail service repair orders that the new motor vehicle dealer submits must cover retail repairs that the new motor vehicle dealer made less than 180 days before the new motor vehicle dealer submits them to the manufacturer.
(e) A manufacturer may not require a new motor vehicle dealer to establish the retail percentage markup by a method other than the method required by (d) of this section. When establishing the retail percentage markup, a manufacturer may not require the new motor vehicle dealer to provide information that is unduly burdensome or time consuming to provide, including part-by-part or transaction-by-transaction calculations.
(f) A manufacturer may not include in the calculation of the rates in the schedule of compensation
(1) repairs for manufacturer special events, manufacturer specials, or manufacturer promotional discounts;
(2) parts sold at wholesale;
(3) routine maintenance not covered under warranty, including the replacement of fluids, filters, and belts, unless the new motor vehicle dealer provides the routine maintenance in the course of making a repair;
(4) nuts, bolts, fasteners, and similar items that do not have an individual part number;
(5) tires, batteries, and light bulbs;
(6) vehicle reconditioning; and
(7) repair orders for motor vehicle body repairs if an insurer pays for the repairs.
(g) The retail percentage markup calculated under (d) of this section may not take effect more than 30 days after the manufacturer approves the dealer's proposed rate, or after the manufacturer is considered to have approved the dealer's proposed rate under this section. If a manufacturer does not disapprove the dealer's proposed rate within 30 days after the new motor vehicle dealer submits the rate application, then the dealer's proposed rate shall be considered approved.
(h) A manufacturer may disapprove a rate proposed by the new motor vehicle dealer under this section if the manufacturer demonstrates that the proposed rate is materially miscalculated or unreasonable compared to other similarly situated new motor vehicle dealers in this state.
(i) A new motor vehicle dealer may not receive more than one rate increase under this section in a calendar year.
(j) In this section,
(1) “rate” means the dollar amount that a manufacturer pays a new motor vehicle dealer for one hour of labor;
(2) “time allowance” means the maximum number of hours and fractions of an hour of labor that may be billed for a particular job.
Sec. 45.25.220. Performance and reimbursement of certain repairs.
(a) Except as provided in (b) of this section, if a new motor vehicle needs repairs that are covered under a manufacturer's warranty, and if the new motor vehicle is located in a remote location, the manufacturer shall make reasonable efforts to arrange for the new motor vehicle to be repaired in the remote location.
(b) If a manufacturer determines that repairs cannot reasonably be made in a remote location within the manufacturer's guidelines, the manufacturer may arrange, at no cost to the owner of the new motor vehicle, to ship the new motor vehicle to a repair facility outside of the remote location and to return the new motor vehicle to the remote location after the repairs are completed.
(c) A manufacturer may direct a new motor vehicle dealer of the manufacturer to refer customers of the new motor vehicle dealer to the manufacturer if the new motor vehicles of the customers are located in remote locations and need repairs.
(d) This section does not prohibit a manufacturer from allowing a new motor vehicle dealer to subcontract warranty work for a specific new motor vehicle that is located in a remote location. If the manufacturer allows the new motor vehicle dealer to subcontract the warranty work, the manufacturer shall compensate the new motor vehicle dealer for the subcontracted warranty work paid for by the new motor vehicle dealer.
(e) In this section, “remote location” means a location that is not accessible by road or that is more than 100 road miles from a new motor vehicle dealer that is authorized to perform warranty work on new motor vehicles.
Sec. 45.25.230. Preparation and service before delivery.
A manufacturer and a distributor shall provide in writing the following information to their new motor vehicle dealers about new motor vehicles and other products received from the manufacturer or distributor:
(1) the specific obligations of the new motor vehicle dealer to prepare and service new motor vehicles and products before delivery of the new motor vehicles and products to buyers;
(2) the compensation that the manufacturer or distributor will pay the dealer for performing the preparation and service obligations described in (1) of this section; and
(3) the amount of time that the manufacturer or distributor will allow the new motor vehicle dealer for performing the preparation and service obligations described in (1) of this section.
Article 3. Manufacturer and Distributor Practices.
Sec. 45.25.300. Unfair practices.
A manufacturer may not
(1) require, coerce, or attempt to coerce a new motor vehicle dealer to change the location of the new motor vehicle dealership or to make any substantial alterations to the new motor vehicle dealership premises or facilities if the alterations would be unreasonable or if there is not expected to be a sufficient supply of new motor vehicles to justify the change of location or the alterations because of market and economic conditions; this paragraph does not apply to alterations that are necessary to comply with health or safety laws; in this paragraph, “substantial alterations” does not include erecting signs subject to the manufacturer's intellectual property rights, doing interior painting that is necessary to keep a new motor vehicle dealer facility in an attractive condition, or performing routine maintenance;
(2) require a new motor vehicle dealer to purchase or include in inventory a predetermined number or percentage of certified pre-owned motor vehicles or lease return motor vehicles;
(3) except because of reasons beyond the manufacturer's control, refuse or fail to deliver or offer for sale in reasonable quantities to a new motor vehicle dealer holding a franchise for a line make of new motor vehicles sold or distributed by the manufacturer a new motor vehicle, part, or accessory, if the new motor vehicle, part, or accessory is being delivered to other new motor vehicle dealers; this paragraph does not apply to limited edition or limited release vehicle parts or accessories;
(4) require a new motor vehicle dealer to purchase unreasonable advertising displays or other materials or an unreasonable number of signs;
(5) require a new motor vehicle dealer to order or accept delivery of a new motor vehicle, part, accessory, piece of equipment, promotional material, display device, display decoration, or other item that is not otherwise required by law and that the new motor vehicle dealer does not voluntarily order; this paragraph does not apply to safety and emissions recall campaign parts or to a motor vehicle feature, part, accessory, or other component required by federal law, the law of this state, or local law;
(6) coerce, attempt to coerce, or require a new motor vehicle dealer to
(A) join, contribute money to, or affiliate with an advertising association; or
(B) participate monetarily in an advertising campaign;
(7) increase the price of a new motor vehicle that the new motor vehicle dealer has ordered from the manufacturer and for which there exists at the time of the order a bona fide sale to a retail or fleet purchaser if the dealer submitted the order to the manufacturer before the manufacturer provided the new motor vehicle dealer with an official written price increase notification; or
(8) recover the manufacturer's costs for compensating a new motor vehicle dealer for warranty work by reducing the amount due to or imposing a separate charge, surcharge, administrative fee, or other similar cost on the new motor vehicle dealer; this paragraph does not prohibit a manufacturer from increasing the price of a new motor vehicle or changing a schedule of compensation in the ordinary course of business.
Sec. 45.25.310. Discrimination.
A manufacturer may not unfairly discriminate among new motor vehicle dealers with respect to warranty reimbursements or authority granted new motor vehicle dealers to make warranty adjustments with retail customers.
Sec. 45.25.320. Time limits on claim audits, claim denials, claim reductions, and charge backs.
Article 4. Dealer Practices.
Sec. 45.25.400. Prohibited use of advertising terms.
(a) A motor vehicle dealer may not use the term “invoice,” “factory invoice,” “dealer invoice,” “dealer cost,” “wholesale price,” or any other term of similar meaning in an advertisement for the sale of a motor vehicle.
(b) A motor vehicle dealer may use the term “manufacturer's suggested retail price,” “MSRP,” or “list price” in an advertisement for the sale of a motor vehicle, subject to the restriction on price comparisons in
AS 45.25.450 and the following:
(1) the manufacturer's suggested retail price or list price must reference the final price listed by the manufacturer on the Monroney sticker, including accessories and options physically attached to the vehicle at the time of delivery to the dealer, plus any transportation charges;
(2) the manufacturer's suggested retail price or the list price does not include charges added by the dealer or options added to the vehicle by the dealer; and
(3) whenever using the term “manufacturer's suggested retail price,” “MSRP,” or “list price,” the dealer may not represent that a buyer would save money by paying a price that is lower than the “manufacturer's suggested retail price,” “MSRP,” or “list price” unless the representation refers to savings from the “manufacturer's suggested retail price,” “MSRP,” or “list price.”
Sec. 45.25.410. Availability of advertised items.
A motor vehicle dealer may not advertise a new motor vehicle at a specified dealer price with the intent not to supply reasonably expected demand, unless the advertisement discloses the number of vehicles in stock at the advertised price.
Sec. 45.25.420. Display of motor vehicles.
A motor vehicle dealer shall display all vehicles advertised for sale for the duration of the sale period in a conspicuous and clearly visible location on the dealer's premises. The advertised sale price for each vehicle must be clearly marked on the vehicle so the consumer can readily identify the advertised price for the vehicle.
Sec. 45.25.430. Refusal to sell on advertised terms and conditions.
A motor vehicle dealer may not refuse to sell a motor vehicle on the terms and conditions that the dealer has advertised. This section does not apply if
(1) the dealer can document that the advertised term or condition was the result of an error on the part of the advertising medium or an outside advertising agent; or
(2) the refusal is based on an error that was made in good faith by the dealer and was clearly and conspicuously a mistake, and the dealer corrected the error as soon as the dealer knew or reasonably should have known of the error.
Sec. 45.25.440. Advertised price.
A motor vehicle dealer's advertised price for a motor vehicle must include all dealer fees and costs, except for fees, such as licensing fees, registration fees, title transfer fees, and sales taxes, actually paid to a government agency. In this section, “dealer fees and costs” includes dealer preparation fees, document preparation fees, surcharges, and other dealer-imposed fees and costs.
Sec. 45.25.450. Advertised price comparisons, reductions, and discounts.
(a) A motor vehicle dealer may not make a price comparison, price reduction, or price discount in an advertisement unless the comparison, reduction, or discount complies with this section.
(b) A motor vehicle dealer may advertise a price comparison for a new motor vehicle with the manufacturer's suggested retail price only if
(1) the dealer only uses the term “manufacturer's suggested retail price,” “MSRP,” or “list price”;
(2) the advertised price references the final price listed by the manufacturer on the Monroney sticker; and
(3) the manufacturer's suggested retail price, MSRP, or list price does not include charges added by the dealer or options added to the vehicle by the dealer.
(c) A motor vehicle dealer may not use a competitor's price as a reference price unless
(1) the reference price is the competitor's current, bona fide price in the trade area of the dealer making the comparison;
(2) the comparison is to an identical or nearly identical vehicle that does not materially differ in model, style, design, name, brand, kind, or quality from the advertised product; and
(3) the dealer includes in the advertised price all charges that the competitor includes in the competitor's price.
(d) A motor vehicle dealer shall be in possession of documents and all other information necessary to substantiate all reference price claims when the claims are made and shall maintain this information in a readily accessible place for two years after the time the reference price claims are made.
(e) A motor vehicle dealer may advertise a price comparison for a used motor vehicle only if the reference price is the retail value of the vehicle as specified in the current edition of a nationally recognized valuation publication for used motor vehicles.
(f) When advertising a price comparison for a used motor vehicle, the advertisement must identify the source of the reference price, and the motor vehicle dealer shall make this source available to a potential retail buyer on request.
Sec. 45.25.460. Advertising and selling practices generally.
(a) In addition to the provisions of
AS 45.50.471 and regulations adopted under
AS 45.50.471, a motor vehicle dealer
(1) may not represent the dealer document preparation fee as a government fee;
(2) may not advertise a specific motor vehicle for sale unless the vehicle identification number, vehicle stocking number, or license number is disclosed in the advertisement or made available by the dealer on request of a retail buyer;
(3) may not use the term “rebate,” “cash back,” or a similar term in advertising the sale of a motor vehicle unless the rebate is expressed in a specific dollar amount and is in fact a rebate offered by the vehicle manufacturer or distributor directly to the retail buyer of the vehicle;
(4) may not require a person, in order to receive the advertised credit terms, to pay a higher price for a motor vehicle and any related goods or services than the cash price the same person would have to pay to purchase the same vehicle and related goods or services;
(5) may not advertise a guaranteed trade-in allowance or range of allowances unless the guarantee is provided by the manufacturer or distributor;
(6) may not affix to a new motor vehicle a supplemental price sticker containing a price that represents the dealer's asking price if the supplemental price sticker exceeds the manufacturer's suggested retail price, unless the supplemental sticker
(A) clearly and conspicuously, in the largest print appearing on the sticker other than the print size used for the dealer's name, discloses that the supplemental sticker price is the dealer's asking price, or words of similar meaning, and is not the manufacturer's suggested retail price;
(B) clearly and conspicuously discloses the manufacturer's suggested retail price; and
(C) states, if the supplemental sticker price is greater than the sum of the manufacturer's suggested retail price and the price of the items added by the dealer, the difference and describes it as additional dealer mark-up;
(7) may not advertise or otherwise represent, or knowingly allow to be advertised or represented on behalf of the dealer, that a down payment is not required in connection with the sale of a motor vehicle when a down payment is in fact required;
(8) may not advertise an offer for the sale, lease, or purchase of a motor vehicle that does not contain the name of the dealer;
(9) may not represent and sell as a new motor vehicle a demonstrator vehicle or a motor vehicle that is a used motor vehicle; in this paragraph, “demonstrator vehicle”
(A) means a motor vehicle
(i) that has been assigned by a dealer for use by the dealership as an executive vehicle for promotional purposes, including being driven in the community;
(ii) that has not been licensed by a retail buyer; and
(iii) the title of which has not been transferred to a retail buyer;
(B) does not include a motor vehicle that has only been driven to demonstrate the motor vehicle to a prospective buyer;
(10) may not advertise that the dealer finances any person or does not reject any person's credit, or make similar claims;
(11) may not advertise or make a statement, declaration, or representation in an advertisement that cannot be substantiated in fact; the burden of proof of the factual basis for the statement, declaration, or representation is on the dealer.
(b) [Repealed, § 9 ch 171 SLA 2004.]
Sec. 45.25.465. Sales of used motor vehicles; required disclosures.
(a) Before the sale of a used motor vehicle, a motor vehicle dealer shall,
(1) when obtaining a used motor vehicle from an individual consumer, make a reasonable inquiry of the seller into the condition of the vehicle, including the accident and repair history of the vehicle; the information shall be recorded in writing and signed by the seller; the dealer shall provide this information to a prospective purchaser of the vehicle;
(2) when a motor vehicle dealer obtains a used motor vehicle from another motor vehicle dealer, a wholesaler, or an auction, disclose to a prospective purchaser of the vehicle that the vehicle was purchased from another dealer, a wholesaler, or an auction.
(b) Nothing in this section creates an express warranty by the dealer.
(c) [Repealed, § 1 ch 56 SLA 2008.]
Sec. 45.25.470. Sales of vehicles manufactured for sale in a foreign country.
Before sale, a motor vehicle dealer shall disclose in writing whether a motor vehicle was originally manufactured for sale in Canada or another foreign country.
Sec. 45.25.480. Identification number plates.
A motor vehicle dealer may not knowingly purchase or sell a vehicle that has an altered or removed vehicle identification number plate, or alter or remove a vehicle identification number plate.
Sec. 45.25.490. Required documentation.
A motor vehicle dealer may not enter into a contract to sell a motor vehicle unless the motor vehicle dealer holds a manufacturer's statement of origin, a title, or another properly executed document reasonably necessary to obtain the statement of origin or title for transfer of the vehicle to the buyer.
Sec. 45.25.500. Trade-ins.
A motor vehicle dealer may not transfer title to a trade-in vehicle or perform any repairs or reconditioning on a trade-in vehicle before the completion of the sales transaction for which the vehicle is a trade-in.
Sec. 45.25.510. Disclosure of damages.
(a) Before entering into a new motor vehicle sales contract, a new motor vehicle dealer shall disclose in writing to a buyer of the new motor vehicle any known damage and repair to the new motor vehicle if the damage exceeds five percent of the manufacturer's suggested retail price as calculated at the dealer's authorized warranty rate for labor and parts, or $1,000, whichever amount is greater. A new motor vehicle dealer is not required to disclose to a buyer that glass, tires, bumpers, or cosmetic parts of a new motor vehicle were damaged at any time if the damaged item has been replaced with original or comparable equipment. A replaced part is not part of the cumulative damage required to be disclosed under this subsection.
(b) If disclosure is not required under this section, a buyer may not revoke or rescind a sales contract due to the fact that the new motor vehicle was damaged and repaired before completion of the sale.
(c) In this section,
(1) “cosmetic parts” means parts that are attached by and can be replaced in total through the use of screws, bolts, or other fasteners without the use of welding or thermal cutting and includes windshields, bumpers, hoods, or trim panels;
(2) “manufacturer's suggested retail price” means the retail price of the new motor vehicle suggested by the manufacturer and includes 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 that is not included within the retail price suggested by the manufacturer for the new motor vehicle.
Sec. 45.25.520. Form of disclosures.
Except as provided in
AS 45.25.460(a)(6)(A), if a disclosure is required by this chapter with respect to a motor vehicle advertisement, the disclosure must be made in a clear and conspicuous manner.
Sec. 45.25.530. Disclosure regarding receipt of commissions.
If a motor vehicle dealer's service operations employees receive a commission for the amount of work they perform, the motor vehicle dealer shall post a conspicuous sign that is visible to service customers that the dealer's service operations employees work on commission.
Sec. 45.25.590. Definitions.
In
AS 45.25.400 — 45.25.590,
(1) “advertise,” “advertised,” “advertising,” and “advertisement” include representations, whether made on or off store premises, made to persons in the print media, in the broadcast media, on the computer, in a brochure, in a flyer, by direct mail, by sign, or on a tag;
(2) “Monroney sticker” means the window sticker required by 15 U.S.C. 1231 — 1233 (Automobile Information Disclosure Act);
(3) “motor vehicle,” notwithstanding the definition of “motor vehicle” in
AS 45.25.990, means a vehicle, including a trailer, that is required to be registered under
AS 28.10, but does not include a motorcycle;
(4) “new motor vehicle,” notwithstanding the definition of “new motor vehicle” in
AS 45.25.990, means a motor vehicle that has not been titled to anyone and still retains the original manufacturer's certificate of origin.
Article 5. Sales and Service Contracts.
Sec. 45.25.600. Title transfer.
A motor vehicle dealer may not transfer the title for a motor vehicle to a buyer before all of the sale documents, including any finance contract arranged by the seller, are complete and executed in final form by all parties to the sale.
Sec. 45.25.610. Sales contracts.
(a) A motor vehicle sales contract must be in writing, signed by both the seller and buyer, and completed as to all essential provisions before the signing of the contract by the buyer and before delivery of the vehicle to the buyer.
(b) [Repealed, § 9 ch 171 SLA 2004.]
(c) If a motor vehicle dealer arranges financing for a buyer, the motor vehicle dealer may deliver the motor vehicle to the buyer before final approval by the financing entity if
(1) the buyer and seller sign an agreement separate from the motor vehicle installment contract on an 8 1/2 x 11 inch sheet of paper that clearly and conspicuously informs the buyer that final financing arrangements have not yet been approved and that clearly sets out the amount that will be financed, the annual percentage rate of the finance charge, the amount of the finance charge, the number and frequency of payments, and the amount of each payment;
(2) the separate agreement clearly and conspicuously informs the buyer that accepting delivery of the vehicle before final financing approval obligates the buyer to terms of the motor vehicle sales contract if the terms on the separate agreement are identical to the terms finally approved by the financing entity; and
(3) the separate agreement provides that the motor vehicle sales contract will be void if any of the terms contained in the separate agreement are changed by either the motor vehicle dealer or the financing institution as a condition of sale or final financing approval.
(d) If a buyer's final financing is not approved and, as a result, the transaction is not completed, and if the motor vehicle dealer has delivered the motor vehicle to the buyer, the buyer shall deliver the motor vehicle to the motor vehicle dealer, the motor vehicle dealer shall return the buyer's entire down payment less any amount owed to the motor vehicle dealer under (e) and (f) of this section, and the buyer's trade-in, if any, shall be returned to the buyer in the same condition and with not more than 100 miles accumulated on the odometer from when the trade-in motor vehicle was delivered to the motor vehicle dealer.
(e) If a buyer's final financing is not approved and the buyer has made an intentional misrepresentation in a credit application or other financial statement provided by the buyer to the motor vehicle dealer or to a financing institution, the buyer shall reimburse the motor vehicle dealer for the buyer's use of the motor vehicle that exceeds 100 miles over the odometer reading on the motor vehicle on the date of the initial delivery, at a rate that is the greater of
(1) the business use mileage rate that is applied by the federal Internal Revenue Service at the time the motor vehicle is returned to the motor vehicle dealer; or
(2) $.45 a mile.
(f) If a buyer's financing is not approved and the buyer has made an intentional misrepresentation as described in (e) of this section, the buyer is responsible for damage to the motor vehicle that occurred while the motor vehicle was in the buyer's possession and for parking tickets, towing fees, storage fees, impound fees, and other similar charges incurred by the buyer for the motor vehicle while the motor vehicle was in the buyer's possession.
(g) In this section, “sales contract” includes an installment sales contract, a short-term sales contract, and a single-payment contract.
Sec. 45.25.620. Service contracts.
(a) A motor vehicle service contract must be in writing and contain all essential provisions regarding the administration of the contract.
(b) If a service contract is included in a motor vehicle sale, the seller shall, before delivery of the motor vehicle, give to the buyer a written statement with all pertinent blank spaces filled in that shall be signed by both the buyer and seller and that clearly and conspicuously
(1) explains the difference between a service contract and a warranty;
(2) discloses the maker of or obligor on the service contract;
(3) describes the relationship between the maker and the seller of the service contract;
(4) for a vehicle that is a used vehicle, notifies the buyer that the seller may not disclaim implied warranties if the seller is the maker or obligor of the service contract; and
(5) includes all other disclosures required by law.
(c) A motor vehicle dealer may not disclaim or limit implied warranties for a motor vehicle for which the motor vehicle dealer is a maker of a service contract sold for that motor vehicle. However, a motor vehicle dealer may disclaim or limit implied warranties as otherwise allowed by law, regardless of the make or model of the motor vehicle, if the motor vehicle dealer is merely the seller, not the maker, of the service contract and does not otherwise extend any written warranties on the motor vehicle that is purchased.
(d) In this section, “maker” means the person that makes, frames, and executes a service contract and assumes any obligation due to the buyer, but does not include a motor vehicle dealer who merely sells the service contract as the agent of a service contract company doing business in this state.
Sec. 45.25.630. Discharged amounts in motor vehicle leases.
(a) Notwithstanding another provision of law to the contrary, if the amount to be paid by a lessee under a motor vehicle lease includes a discharged amount, the inclusion of the discharged amount in the amount to be paid under the lease is not a loan of the discharged amount and is not subject to any law that regulates the disclosure of interest, the charging of interest, the amount of interest rates, or the lending of money.
(b) In this section, “discharged amount” means the amount, if any, that the lessor agrees to pay to discharge an outstanding obligation of the lessee under an existing motor vehicle agreement, loan, installment sales contract, or lease.
Article 6. General Provisions.
Sec. 45.25.900. Conflict with other law.
If a provision of this chapter conflicts with another provision of this title, this chapter controls.
Sec. 45.25.910. Remedial purpose.
The provisions of this chapter are remedial.
Sec. 45.25.990. Definitions.
In this chapter,
(1) “dealer” means a new motor vehicle dealer or used motor vehicle dealer;
(2) “dealership” means the business entity that is operated by a motor vehicle dealer;
(3) “distributor” means a person or entity who sells or distributes new or used motor vehicles to motor vehicle dealers or who maintains or sends distributor representatives within or to this state to sell or distribute new or used motor vehicles to motor vehicle dealers in this state; in this paragraph, “distributor representative” means a representative employed by a distributor branch, distributor, or wholesaler who sells or distributes new or used motor vehicles to franchised motor vehicle dealers in this state;
(4) “distributor branch” means a branch office maintained by a distributor or wholesaler who sells or distributes new or used motor vehicles to franchised motor vehicle dealers in this state;
(5) “franchise” means a written arrangement for a definite or indefinite period in which a manufacturer, distributor, or motor vehicle wholesaler grants to a motor vehicle dealer a license, sales and service agreement, or contract of any kind to use a trade name, service mark, or related characteristic, and in which there is a community of interest in the wholesale or retail marketing of related motor vehicles or services;
(6) “franchised” means having a franchise;
(7) “fraud” includes a promise or representation not made honestly or in good faith, and an intentional failure to disclose a material fact;
(8) “good faith” means honesty in fact and the observation of reasonable commercial standards of fair dealing in the trade;
(9) “lease,” except in
AS 45.25.150, means a contract by which a person owning a motor vehicle grants to another person the right to possess, use, and enjoy the motor vehicle for a specified period of time in exchange for periodic payment of a stipulated price and in which the use of the vehicle is granted for a period of 12 or more months;
(10) “manufacturer” means a person or the person's subsidiary who manufacturers, imports, distributes, or assembles new motor vehicles and includes an administrator, a distributor, a distributor branch, and a factory branch; in this paragraph, “factory branch” means a branch office maintained by a manufacturer for directing and supervising the representatives of the manufacturer;
(11) “manufacturer representative” means any employee or agent of a manufacturer who engages in the business of contacting a manufacturer's respective franchised dealers for the purpose of making or promoting the sale of the manufacturer's vehicles, parts, accessories, or services;
(12) “motor vehicle” means a motor vehicle that is required to be registered under
AS 28.10, but does not include a motor home, a recreational vehicle, or a motorcycle; in this paragraph,
(A) “all-terrain vehicle” has the meaning given in
AS 45.27.390;
(B) “recreational vehicle” includes an all-terrain vehicle and a snow machine;
(C) “snow machine” has the meaning given in
AS 45.27.390;
(13) “motor vehicle dealer” has the meaning given in
AS 08.66.350, except that, in this paragraph, notwithstanding the definition of “motor vehicle” given in
AS 08.66.350, “motor vehicle” has the meaning given in this section;
(14) [Repealed, § 61 ch 22 SLA 2015.]
(15) “new motor vehicle” means a motor vehicle that has not been previously sold to and registered to a person except a distributor, wholesaler, or motor vehicle dealer for resale;
(16) “new motor vehicle dealer” means a motor vehicle dealer for new motor vehicles or for new and used motor vehicles;
(17) “sale” means the issuance, transfer, agreement for transfer, exchange, gift, pledge, hypothecation, or mortgage in any form, whether by transfer in trust or otherwise, of a motor vehicle, an interest in a motor vehicle, or a related franchise;
(18) “schedule of compensation” means a schedule of compensation established under
AS 45.25.210 that includes parts, rates for labor, and time allowances for labor;
(19) “service contract” means an optional agreement that is separate from a contract for the sale of a motor vehicle and that covers certain repair or maintenance functions beyond coverage provided by a warranty;
(20) “terminate” includes
(A) canceling or not renewing;
(B) a manufacturer discontinuing the sale and distribution of a new motor vehicle line make covered by a franchise;
(21) “used motor vehicle” means a motor vehicle that has been previously sold to and registered to a person other than a distributor, wholesaler, or motor vehicle dealer;
(22) “used motor vehicle dealer” means a motor vehicle dealer for used motor vehicles;
(23) “warranty work”
(A) means repairs that are covered under a manufacturer's warranty or a recall;
(B) means work that the manufacturer in good will directs be performed and reimbursed by the manufacturer but that is not covered by the manufacturer's warranty or a recall;
(C) does not mean work under a separate service contract.