§ 44-20-124 — Unlawful acts

Colorado § 44-20-124

• Jurisdiction: Colorado
• Title 44: Revenue -
• Art.: Sale of Self-propelled Vehicles

Text

(1) It is unlawful and a violation of this part 1 for
any manufacturer, distributor, or manufacturer representative:

(a) To willfully fail to perform or cause to be performed any written
warranties made with respect to any motor vehicle or parts thereof;

(b) To coerce or attempt to coerce any motor vehicle dealer to perform or
allow to be performed any act that could be financially detrimental to the dealer or
that would impair the dealer's goodwill or to enter into any agreement with a
manufacturer or distributor that would be financially detrimental to the dealer or
impair the dealer's goodwill, by threatening to cancel or not renew any franchise
between a manufacturer or distributor and the dealer;

(c) To coerce or attempt to coerce any motor vehicle dealer to accept
delivery of any motor vehicle, parts or accessories therefor, or any commodities or
services that have not been ordered by the dealer;

(d) (I) To cancel or cause to be canceled, directly or indirectly, without just
cause, the franchise of any motor vehicle dealer, and the nonrenewal of a franchise
or selling agreement without just cause is a violation of this subsection (1)(d) and
shall constitute an unfair cancellation.

(II) As used in this subsection (1)(d), just cause shall be determined in the
context of all circumstances surrounding the cancellation or nonrenewal, including
but not limited to:

(A) The amount of business transacted by the motor vehicle dealer;

(B) The investments necessarily made and obligations incurred by the motor
vehicle dealer, including but not limited to goodwill, in the performance of its duties
under the franchise agreement, together with the duration and permanency of the
investments and obligations;

(C) The potential for harm to consumers as a result of disruption of the
business of the motor vehicle dealer;

(D) The motor vehicle dealer's failure to provide adequate service of
facilities, equipment, parts, and qualified service personnel;

(E) The motor vehicle dealer's failure to perform warranty work on behalf of
the manufacturer, subject to reimbursement by the manufacturer; and

(F) The motor vehicle dealer's failure to substantially comply, in good faith,
with requirements of the franchise that are determined to be reasonable and
material.

(III) The following conduct by a motor vehicle dealer shall constitute just
cause for termination without consideration of other factors:

(A) Conviction of, or a plea of guilty or nolo contendere to, a felony;

(B) A continuing pattern of fraudulent conduct against the manufacturer or
consumers; or

(C) Continuing failure to operate for ten days or longer.

(e) To withhold, reduce, or delay unreasonably or without just cause delivery
of motor vehicles, motor vehicle parts and accessories, commodities, or money due
motor vehicle dealers for warranty work done by any motor vehicle dealer;

(f) To withhold, reduce, or delay unreasonably or without just cause services
contracted for by motor vehicle dealers;

(g) To coerce any motor vehicle dealer to provide installment financing with
a specified financial institution;

(h) To violate any duty imposed by, or fail to comply with, any provision of
section 44-20-125, 44-20-126, or 44-20-127;

(i) (I) To fail to provide to the motor vehicle dealer, within twenty days after
receipt of a notice of intent from a motor vehicle dealer, the list of documents and
information necessary to approve the sale or transfer of the ownership of a
dealership by sale of the business or by stock transfer or the change in executive
management of the dealership;

(II) To fail to confirm within twenty days after receipt of all documents and
information listed in subsection (1)(i)(I) of this section that the documentation and
information has been received;

(III) To refuse to approve, unreasonably, the sale or transfer of the ownership
of a dealership by sale of the business or by stock transfer within sixty days after
the manufacturer has received all documents and information necessary to approve
the sale or transfer of ownership, or to refuse to approve, unreasonably, the change
in executive management of the dealership within sixty days after the
manufacturer has received all information necessary to approve the change in
management; except that nothing in this part 1 shall authorize the sale, transfer, or
assignment of a franchise or a change of the principal operator without the
approval of the manufacturer or distributor unless the manufacturer or distributor
fails to send notice of the disapproval within sixty days after receiving all
documents and information necessary to approve the sale or transfer of ownership;
or

(IV) To condition the sale, transfer, relocation, or renewal of a franchise
agreement, or to condition sales, services, parts, or finance incentives, upon site
control or an agreement to renovate or make improvements to a facility; except
that voluntary acceptance of the conditions by the dealer shall not constitute a
violation;

(j) (I) (A) To fail or refuse to offer to its same line-make franchised dealers all
models manufactured for that line-make except as a result of a strike or labor
difficulty, lack of manufacturing capacity, shortage of materials, freight embargo,
or other cause over which the manufacturer has no control; or

(B) To require a dealer to pay an unreasonable fee, purchase unreasonable
advertising displays or other materials, or comply with unreasonable training or
facilities requirements as a prerequisite to receiving any particular model of that
same line-make. For purposes of this subsection (1)(j)(I)(B), reasonableness shall be
judged based on the circumstances of the individual dealer and the conditions of
the market served by the dealer.

(II) This subsection (1)(j) shall not apply to manufacturers of recreational
vehicles nor to manufacturers of vehicles with a passenger capacity of thirty-two or
more.

(k) To require, coerce, or attempt to coerce any motor vehicle dealer to
refrain from participation in the management of, investment in, or acquisition of any
other line-make of new motor vehicles or related products; except that this
subsection (1)(k) shall not apply unless the motor vehicle dealer:

(I) Maintains a reasonable line of credit for each make or line of new motor
vehicles;

(II) Remains in compliance with reasonable capital standards and reasonable
facilities requirements specified by the manufacturer; except that reasonable
facilities requirements shall not include a requirement that a motor vehicle dealer
establish or maintain exclusive facilities, personnel, or display space; and

(III) Provides written notice to the manufacturer, distributor, or
manufacturer's representative, no less than ninety days prior to the dealer's intent
to participate in the management of, investment in, or acquisition of another line-make of new motor vehicles or related products;

(l) (I) To fail to pay to a motor vehicle dealer, within ninety days after the
termination, cancellation, or nonrenewal of a franchise, all of the following:

(A) The dealer cost, plus any charges made by the manufacturer for
distribution, delivery, and taxes, less all allowances paid or credited to the motor
vehicle dealer by the manufacturer, of unused, undamaged, and unsold motor
vehicles in the motor vehicle dealer's inventory that were acquired from the
manufacturer or from another motor vehicle dealer of the same line-make in the
ordinary course of business within the previous twelve months;

(B) The dealer cost, less all allowances paid or credited to the motor vehicle
dealer by the manufacturer, for all unused, undamaged, and unsold supplies, parts,
and accessories in original packaging and listed in the manufacturer's current parts
catalog;

(C) The fair market value of each undamaged sign owned by the motor
vehicle dealer and bearing a common name, trade name, or trademark of the
manufacturer if acquisition of the sign was required by the manufacturer;

(D) The fair market value of all special tools and equipment that were
acquired from the manufacturer or from sources approved and required by the
manufacturer and that are in good and usable condition, excluding normal wear and
tear; and

(E) The cost of transporting, handling, packing, and loading the motor
vehicles, supplies, parts, accessories, signs, special tools, equipment, and
furnishings described in this subsection (1)(l).

(II) This subsection (1)(l) shall only apply to manufacturers of recreational
vehicles in cases where the manufacturer terminates, cancels, or fails to renew the
recreational vehicle dealer franchise; and this subsection (1)(l) shall not apply to
manufacturers of vehicles with a passenger capacity of thirty-two or more.

(m) To require, coerce, or attempt to coerce any motor vehicle dealer to
close or change the location of the motor vehicle dealer, or to make any substantial
alterations to the dealer premises or facilities when doing so would be
unreasonable or without written assurance of a sufficient supply of motor vehicles
so as to justify the changes, in light of the current market and economic conditions;

(n) (I) To authorize or permit a person to perform warranty service repairs on
motor vehicles unless the person is:

(A) A motor vehicle dealer with whom the manufacturer has entered into a
franchise agreement for the sale and service of the manufacturer's motor vehicles;
or

(B) A person or government entity that has purchased new motor vehicles
pursuant to a manufacturer's fleet discount program and is performing the
warranty service repairs only on vehicles owned by the person or entity.

(II) This subsection (1)(n) shall not apply to manufacturers of recreational
vehicles nor to manufacturers of vehicles with a passenger capacity of thirty-two or
more.

(o) To require, coerce, or attempt to coerce any motor vehicle dealer to
prospectively agree to a release, assignment, novation, waiver, or estoppel that
would relieve any person of a duty or liability imposed under this article 20 except
in settlement of a bona fide dispute;

(p) To discriminate between or refuse to offer to its same line-make
franchised dealers all models manufactured for that line-make based upon
unreasonable sales and service standards;

(q) To fail to make practically available any incentive, rebate, bonus, or other
similar benefit to a motor vehicle dealer that is offered to another motor vehicle
dealer of the same line-make within this state;

(r) To fail to pay to a motor vehicle dealer:

(I) Within ninety days after the termination, cancellation, or nonrenewal of a
franchise for the failure of a dealer to meet performance sales and service
obligations or after the termination, elimination, or cessation of a line-make, the
cost of the lease for the facilities used for the franchise or line-make for the
unexpired term of the lease, not to exceed one year; except that:

(A) If the motor vehicle dealer owns the facilities, the value of renting the
facilities for one year, prorated for each line-make based upon total sales volume
for the previous twelve months before the involuntary termination;

(B) If the dealer sells recreational vehicles and a subsequent manufacturer
or distributor that manufactures or distributes recreational vehicles replaces any
portion of the vacated facilities, the lease or rental value shall be prorated on a
monthly basis unless the dealer sells motor vehicles that are not recreational
vehicles;

(C) Nothing in this subsection (1)(r)(I) shall be construed to limit the
application of subsection (1)(d) of this section;

(II) Within ninety days after the termination, elimination, or cessation of a
line-make or the termination of a franchise due to the insolvency of the
manufacturer or distributor, the fair market value of the motor vehicle dealer's
goodwill for the line-make as of the date the manufacturer or distributor announces
the action that results in the termination, elimination, or cessation, not including any
amounts paid under subsections (1)(l)(I)(A) to (1)(l)(I)(E) of this section;

(s) To condition a franchise agreement on improvements to a facility unless
reasonably required by the technology of a motor vehicle being sold at the facility;

(t) To sell or offer for sale a low-speed electric vehicle, as defined by section
42-1-102, for use on a roadway unless the vehicle complies with part 2 of article 4 of
title 42;

(u) To charge back, deny motor vehicle allocation, withhold payments, or
take other actions against a motor vehicle dealer if a motor vehicle sold by the
motor vehicle dealer is exported from Colorado unless the manufacturer,
distributor, or manufacturer representative proves that the motor vehicle dealer
knew or reasonably should have known a motor vehicle was intended to be
exported, which shall operate as a rebuttable presumption that the motor vehicle
dealer did not have the knowledge;

(v) Within ninety days after the termination, elimination, or cessation of a
line-make or the termination, cancellation, or nonrenewal of a franchise by the
manufacturer, distributor, or manufacturer representative, for any reason other
than that the motor vehicle dealer commits fraud, makes a misrepresentation, or
commits any other crime within the scope of the franchise agreement or in the
operation of the dealership, to fail to reimburse a motor vehicle dealer for the cost
depreciated by five percent per year of any upgrades or alterations to the motor
vehicle dealer's facilities required by the manufacturer, distributor, or manufacturer
representative within the previous five years;

(w) To fail to notify a motor vehicle dealer at least ninety days before the
following and to provide the specific reasons for the following:

(I) Directly or indirectly terminating, canceling, or not renewing a franchise
agreement; or

(II) Modifying, replacing, or attempting to modify or replace the franchise or
selling agreement of a motor vehicle dealer, including a change in the dealer's
geographic area upon which sales or service performance is measured, if the
modification would substantially and adversely alter the rights or obligations of the
dealer under the current franchise or selling agreement or would substantially
impair the sales or service obligations or the dealer's investment;

(x) To require, coerce, or attempt to coerce a motor vehicle dealer to
substantially alter a facility or premises if:

(I) The facility or premises has been altered within the last ten years at a cost
of more than two hundred fifty thousand dollars and the alteration was required
and approved by the manufacturer, distributor, or manufacturer representative
unless subsection (1)(x)(II) of this section applies to the dealer; except that this
subsection (1)(x) does not apply to improvements made to comply with health or
safety laws, to improvements made to accommodate the technology requirements
necessary to sell or service a line-make, to technological improvements related to
electric, automated, compressed natural gas, and fuel-cell motor vehicles, or to
improvements made to install or upgrade electric vehicle charging equipment; or

(II) (A) Except as provided in subsection (1)(x)(II)(B) of this section, the motor
vehicle dealer: Sells only motorcycles, autocycles, motorcycles and autocycles, or
motorcycles, autocycles, and powersports vehicles; the facility or premises has
been altered within the last ten years at a cost of more than twenty-five thousand
dollars; and the alteration was required and approved by the manufacturer,
distributor, or manufacturer representative.

(B) This subsection (1)(x)(II) does not apply to improvements made to comply
with health or safety laws; to improvements made to accommodate the technology
requirements necessary to sell or service a line-make; to technological
improvements related to electric, automated, compressed natural gas, and fuel-cell
motorcycles and powersports vehicles; or to improvements made to install or
upgrade electric vehicle charging equipment.

(y) (I) To sell or offer to sell new motor vehicles to a franchised motor vehicle
dealer with whom the manufacturer has a franchise agreement at a lower actual
price than the actual price offered to any other motor vehicle dealer with whom the
manufacturer has a franchise agreement for the same motor vehicle similarly
equipped; except that this subsection (1)(y) does not apply to:

(A) Resale to any government;

(B) Donation or use by the dealer in a driver education program; or

(C) A price change made in the ordinary course of business if made available
to all motor vehicle dealers when the price changes.

(II) This subsection (1)(y) does not prohibit a manufacturer, distributor, or
manufacturer representative from offering incentive programs, sales-promotion
plans, or other discounts if the incentives or discounts are reasonably available to
all motor vehicle dealers with whom the manufacturer has a franchise agreement.

(z) To require a motor vehicle dealer to grant a manufacturer, distributor, or
manufacturer representative the following or to enforce the following if the
exercise of the contractual right would stop the transfer of the motor vehicle dealer
ownership from an owner to an immediate family member of the owner:

(I) A right of first refusal to purchase the motor vehicle dealer; or

(II) An option to purchase the motor vehicle dealer; and

(aa) (I) To use an unreasonable, arbitrary, or unfair performance standard in
determining a motor vehicle dealer's compliance with a franchise agreement;

(II) To fail to communicate, upon the request of the dealer, any performance
standard in a clear and concise writing to a motor vehicle dealer before applying
the standard to the motor vehicle dealer.

(2) It is unlawful for any person to act as a motor vehicle dealer,
manufacturer, distributor, wholesaler, manufacturer representative, used motor
vehicle dealer, buyer agent, wholesale motor vehicle auction dealer, business
disposer, or motor vehicle salesperson unless the person has been duly licensed
under this part 1, except for:

(a) Persons exempt from licensure as a manufacturer under section 44-20-102 (14); however, manufacturers exempt from licensing shall comply with all other
applicable requirements for manufacturers, including those pertaining to vehicle
identification numbers and manufacturers' statements of origin; and

(b) Business owners selling a vehicle if the vehicle has been owned for more
than one year, the vehicle has been used exclusively for business purposes, the
vehicle is titled in the name of the business, all applicable taxes related to the
vehicle have been paid, and the total number of vehicles sold by a business owner
over a two-year period does not exceed twenty vehicles.

(3) It is unlawful and a violation of this part 1 for a buyer's agent to engage in
the following:

(a) To make a material misstatement in an application for a license;

(b) To willfully fail to perform or cause to be performed any written
agreement with respect to any motor vehicle or parts thereof;

(c) To defraud any buyer, seller, motor vehicle salesperson, or financial
institution;

(d) To intentionally enter into a financial agreement with a seller of a motor
vehicle for the buyer agent's own benefit;

(e) To coerce any motor vehicle dealer into providing installment financing
with a specified financial institution.

Legislative History

Source: L. 2018: Entire article added with relocations, (SB 18-030), ch. 7, p. 72, � 2, effective October 1. L. 2019: IP(2) amended, (SB 19-249), ch. 309, p. 2806, � 9, effective August 2. L. 2022: (1)(x)(II) amended, (HB 22-1043), ch. 361, p. 2589, � 32, effective January 1, 2023.