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Quinn signs bill to strengthen dealer franchise act

November 15, 2010

Illinois Gov. Pat Quinn approved legislation on May 22 that gives dealers added protection against what constitutes good cause for a manufacturer to cancel or fail to renew a franchise or selling agreement.

The new law took effect immediately. Senate Bill 1417 reached The bill reached Quinn’s desk one day earlier, after state lawmakers cleared the bill on a combined vote of 170-1.

Among other things, manufacturers that discontinue a brand now must prove good cause to the Illinois Motor Vehicle Review Board before terminating any dealers. Also, such a manufacturer must buy back new vehicles, parts and equipment from affected franchised dealers.

The new law also permits a dealer to sell multiple vehicle brands at a single location. A manufacturer also must provide an itemized list of what is considered reasonable compensation to a dealer for the value of the franchise and business premises, as well as a payment scheme for such compensation.

Also, the legislation winnows the audit period for dealer incentives and reimbursement claims, from 18 months to 12 months, to coincide with the audit period for warranty claims. And, it prohibits manufacturers from denying access to certain dealers when selling factory pre-owned vehicles, and it amends the definition of "motor vehicle" to include truck engines, transmissions and rear axles for trucks that weigh more than 16,000 pounds.

The CATA thanks the Illinois Automobile Dealers Association for the work expended on this legislation, plus the efforts of lawmakers Sens. John Millner (R-Schaumburg) and Martin Sandoval (D-Chicago); and Reps. Jay Hoffman (D-Collinsville) and John Fritchey (D-Chicago).