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State bill to protect dealers 2/3 way home

November 15, 2010

A state bill to protect dealers if a manufacturer eliminates a line make passed the Illinois Senate April 2 and has had a first reading in the House. If Senate Bill 1417 passes two more House readings, it would be sent to Gov. Pat Quinn.

Under the legislation, dealers would have added protection against what constitutes good cause for a manufacturer to cancel or fail to renew a franchise or selling agreement.

Among other things, SB1417 would strike language currently in the state’s Motor Vehicle Franchise Act which states "Good cause shall exist to cancel, terminate or fail to offer a renewal or replacement franchise or selling agreement to all franchisees of a line make if the manufacturer permanently discontinues the manufacture or assembly of motor vehicles of such line make."

If a line make is terminated, the legislation also requires manufacturers to buy back new vehicles, parts and equipment from franchised dealers.

Senate Bill 1417 also would make it a violation for a manufacturer to require or coerce a dealer to underutilize the dealer’s facilities by requiring or coercing the dealer to cease operations for the selling or servicing of any vehicles that fall under a franchise agreement with another manufacturer. And, the bill provides 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.

The legislation also 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.