1. (A) Anything to the contrary notwithstanding, it shall be unlawful for the manufacturer, wholesaler, distributor, or franchisor, without due cause, to fail to renew on terms then equally available to all its motor vehicle dealers of the same line-make, to terminate a franchise or to unreasonably restrict the transfer of a franchise unless the franchisee shall receive fair and reasonable compensation for the value of the business and compensation for its dealership facilities or location as provided in subsection (C).

2. (B) In determining the fair and reasonable compensation for a business, pursuant to subsection (A) or (D), the value of the business shall include, but not be limited to:

   1. (1) the dealer cost for all new untitled, undamaged, and unaltered motor vehicles in the dealer's inventory purchased from the manufacturer or from another same line-make dealer in the ordinary course of business within eighteen months of termination;
   2. (2) the dealer cost for all new, unused, and undamaged parts listed in the current price catalog and still in the original, resalable merchandising package and in unbroken lots, purchased from the manufacturer or distributor;
   3. (3) the fair market value of signage bearing a trademark or trade name of the manufacturer or line-make purchased from and required by the manufacturer or distributor;
   4. (4) the fair market value of special tools and automotive service equipment owned by the dealer that were designated as special tools or equipment required by and purchased from the manufacturer or distributor, if the tools and equipment are in useable and good condition, normal wear and tear excepted; and

   5. (5) the reasonable cost of return shipping and handling charges incurred as a result of returning such items.

      Provided the new motor vehicle dealer has clear title to the inventory and other items and is in a position to convey that title to the manufacturer, the payments required under this section shall be paid by the manufacturer, wholesaler, distributor, or franchisor within ninety days of the effective date of the termination, nonrenewal, or cancellation of a franchise. If the inventory or other items are subject to a security interest, the manufacturer, wholesaler, distributor, or franchisor may make payment jointly to the dealer and the holder of the security interest.

3. (C) Within ninety days of the termination, cancellation, or nonrenewal of a franchise by a manufacturer, wholesaler, distributor, or franchisor, due to a dealer's poor sales and service performance, or due to the discontinuation of a line-make, the party shall pay the franchisee an amount equal to:

   1. (1) the franchisee's reasonable cost to rent or lease its dealership facility or location for one year or the unexpired term of the lease or rental period, whichever is less; or

   2. (2) the reasonable rental value of the facilities or location for one year if the franchisee owns the facility or location.

      If more than one franchise is being terminated, canceled, or not renewed, the reimbursement shall be prorated equally among the different manufacturers, wholesalers, distributors, and franchisors. If the facility is used for the operations of more than one franchise and only one is being terminated, the reasonable rent shall be paid based upon the prorated portion of new vehicle sales for the previous year attributable to the line-make being terminated, canceled, or nonrenewed for the prior one-year period.

4. (D) In the event a franchisee terminates the franchise agreement with the manufacturer, wholesaler, distributor, or franchisor, it is unlawful for the manufacturer, wholesaler, distributor, or franchisor to not abide by the provisions included in subsection (B) in determining fair and reasonable compensation to the dealer. However, the requirements of subsection (B) do not apply to a termination, cancellation, or nonrenewal due to the sale of the assets or stock of a motor vehicle franchisee.
5. (E) In the case of a franchise for motor homes as defined in Section 56-15-10(q), subsections (B), (C), and (D) do not apply.

HISTORY: 1962 Code Section 46-150.159; 1972 (57) 2419; 2009 Act No. 52, Section 3, eff upon approval (became law without the Governor's signature on June 3, 2009).

Effect of Amendment

The 2009 amendment designated subsection (A), added "of the same line-make" and "unreasonably" before "restrict", substituted "franchisee" for "franchise", and added at the end "and compensation for its dealership facilities or location as provided in subsection (C)"; and added subsections (B) through (E) relating to factors to be considered in calculating the fair and reasonable compensation for the value of a dealership franchise.