§ 49-1617 — PROTESTS — HEARINGS — COSTS

(1) Within twenty (20) days of the completion of mediation, a dealer may file with the department to protest:
(a) The termination, cancellation, or nonrenewal of a franchise;
(b) The establishment or relocation of a dealership;
(c) A refusal to honor the appointment of a designated family member pursuant to section 49-1615, Idaho Code;
(d) A refusal to honor a proposed modification of a dealer sales and service agreement; or
(e) For the resolution of any other dispute between a manufacturer or distributor and a new vehicle dealer alleged to arise from a violation of Idaho law.
(2) When a protest is filed, the department shall inform the manufacturer or distributor that a timely protest has been filed and the manufacturer or distributor shall have twenty (20) days to respond to the protest.
(3) All costs of the department, including the cost of the hearing officer and the cost of preparing the record, shall be apportioned by the hearing officer. The hearing officer may in his discretion award costs to the prevailing party. A dealer suffering pecuniary loss because of a violation of this chapter, upon prevailing in a protest action for such violation, shall be entitled to costs and reasonable attorney’s fees to be determined by the hearing officer. In the event of a willful violation, a dealer shall be entitled to damages equal to three (3) times the pecuniary loss suffered to be awarded by the hearing officer or by the court.
(4) The office of administrative hearings shall appoint a hearing officer to preside over and conduct the protest as a contested case hearing under the provisions of chapter 52, title 67, Idaho Code. In such a hearing:
(a) The manufacturer or distributor has the burden of proof to establish good cause as provided in subsection (5) of this section. This shall include but not be limited to termination, cancellation, or nonrenewal of any franchise agreement by the manufacturer or distributor for insolvency, license revocation, conviction of a felony, fraud by a dealer, or failure by a dealer to comply with a provision of the franchise agreement where the provision is both reasonable and of material significance to the franchise agreement relationship.
(b) The rules of evidence for a protest hearing are the same as those found in chapter 52, title 67, Idaho Code.
(c) The hearing officer may issue subpoenas, administer oaths, and compel the attendance of witnesses and production of books, papers, documents, and all other evidence and may apply to the district court of the county in which the hearing is held for a court order enforcing this section.
(d) The hearing shall be conducted pursuant to chapter 52, title 67, Idaho Code.
(e) A transcript of the testimony of each witness taken at the hearing must be made and preserved.
(f) Within sixty (60) days after the hearing, the hearing officer shall issue a preliminary order pursuant to section 67-5245, Idaho Code. The preliminary order shall be deemed a final order upon issuance.
(g) Any party to a hearing before the department may appeal pursuant to the applicable provisions of chapter 52, title 67, Idaho Code.
(h) The manufacturer or distributor shall not terminate a dealership, establish a new dealership, relocate a dealership, discontinue an existing franchise, or take any other proposed action described in this chapter until a final decision has been rendered and all appellate remedies available to the dealer have been exhausted. The manufacturer or distributor and the dealer shall abide by the terms of the franchise agreement and Idaho law during the appeals process.
(5)(a) In determining whether good cause has been established for terminating or not continuing a franchise agreement, all existing circumstances shall be taken into account, including but not limited to:
(i) The dealer’s sales in relation to the Idaho market that are essential, reasonable, and not discriminatory and that take into account the dealer’s local market variations beyond adjusting for the local popularity of general vehicle types and whether the manufacturer or distributor has supplied the dealer with new vehicles or new vehicle parts or accessories in a reasonable time and in sufficient quantity to permit the dealer to meet the manufacturer’s or distributor’s minimum sales requirements;
(ii) Investment necessarily made and obligations incurred by the dealer in the performance of the dealer’s part of the franchise;
(iii) The permanency of the investment;
(iv) Whether it is injurious to the public welfare for the business of the dealer to be discontinued;
(v) Whether the dealer has adequate new motor vehicle facilities, equipment, parts, and qualified management, sales, and service personnel to reasonably provide consumer care for the new motor vehicles sold at retail by the dealer and any other new motor vehicle of the same line make;
(vi) Whether the dealer refuses to honor warranties of the manufacturer or distributor to be performed by the dealer if the manufacturer or distributor reimburses the dealer for warranty work performed by the dealer pursuant to this section; and
(vii) Actions by the dealer, which shall include but not be limited to: insolvency, license revocation, conviction of a felony, or fraud by a dealer that result in a material breach of the written and uniformly applied requirements of the franchise agreement that are reasonable and material.
(b) Notwithstanding the terms, provisions, or conditions of the franchise agreement, the following do not constitute good cause for the termination or noncontinuance of a franchise:
(i) A change in ownership arising from the retirement, death, or incapacity of an owner who is not listed in the franchise as one on whose expertise and abilities the manufacturer or distributor relied in the granting of the franchise;
(ii) The fact that the dealer:
1. Owns, has an investment in, participates in the management of, or holds a franchise agreement for the sale or service of another make or line of motor vehicles; or
2. Has established another make or line of new motor vehicles or service in the same dealership facilities as those of the manufacturer or distributor that existed prior to January 1, 1997, or is approved in writing by the manufacturer or distributor;
(iii) The fact that the dealer refused to order, purchase, or accept delivery of a new motor vehicle, part, accessory, or any other commodity or service not ordered by the dealer or refused to order, purchase, or accept delivery of any new vehicle with special features, accessories, or equipment not included in the list price of such vehicles as publicly advertised by the manufacturer or distributor;
(iv) The failure of a dealer to:
1. Establish or maintain exclusive facilities, personnel, or display space;
2. Expand facilities without a written guarantee of a sufficient supply of new vehicles so as to justify an expansion, in light of the market and economic conditions;
3. Make significant modifications to an existing dealership or to construct a new vehicle dealership facility without providing a written guarantee of a sufficient supply of new vehicles so as to justify modification or construction, in light of the market and economic conditions; or
(v) The desire of a manufacturer or distributor or a manufacturer’s or distributor’s representative for greater market penetration or to alter the number of the manufacturer’s or distributor’s or manufacturer’s or distributor’s representative’s franchises or dealer locations.
(c) In making a determination of whether there is good cause for permitting a proposed modification of a dealer sales and service agreement or a dealer’s relevant market area, the burden of proof shall be on the manufacturer or distributor, except that the burden of proof with regard to the factors set forth in this subsection shall be on the dealer, and the department shall consider any relevant factors, including:
(i) The reasons for the proposed modification;
(ii) Whether the proposed modification is applied to or affects all motor vehicle dealers in a nondiscriminatory manner;
(iii) The degree to which the proposed modification will have a substantial and adverse effect upon the motor vehicle dealer’s rights, investment, or return on investment;
(iv) Whether the proposed modification is in the public interest;
(v) The traffic patterns between consumers and the same line make franchised dealers of the affected manufacturer, distributor, or factory branch who are located within the market;
(vi) The pattern of new vehicle sales and registrations of the affected manufacturer, distributor, or factory branch within various portions of the area of sales effectiveness and within the market as a whole;
(vii) The growth or decline in population, density of population, and new car registrations in the market;
(viii) The presence or absence of natural geographical obstacles or boundaries, such as rivers;
(ix) The proximity of census tracts or other geographic units used by the affected manufacturer or distributor in determining the same line make dealer’s respective relevant market area; and
(x) The reasonableness of the change or proposed change to the dealer’s area of sales effectiveness, considering the benefits and harm to the petitioning dealer, other same line make dealers, and the manufacturer, distributor, or factory branch.
(d) In determining whether good cause exists for a refusal to accept a dealer successor appointed pursuant to section 49-1615, Idaho Code, the manufacturer or distributor has the burden of proving that the appointed successor is not of good moral character or does not meet the manufacturer’s or distributor’s existing, reasonable, and uniformly applied standards and, considering the volume of sales and service of the dealership, uniformly applied minimum business experience standards in the consumer consumption channel.
(e) In determining whether good cause was established for not entering into an agreement or relocating an additional franchise for the same line make, the department shall take into consideration the existing circumstances within the existing franchise’s relevant market area, including:
(i) Permanency of the investment of both the existing and proposed franchises;
(ii) Investment necessarily made and obligations incurred by other existing franchisees of the same line make in that relevant market area in the performance of their part of their franchise agreements and the date of such investment made and obligations incurred by such franchisees in relation to the date of appointment of the additional franchisee;
(iii) Growth or decline in population and new car registrations in the consumer consumption area and whether the population and demographic characteristics of that relevant market area have changed since appointment of the other existing franchisees sufficiently to support the economic viability of both the other existing franchisees and the additional franchisee;
(iv) Effect on the consuming public in the relevant market area and whether the other existing franchisees of the same line make in that relevant market area are substantially compliant with reasonable manufacturer or distributor requirements in providing adequate consumer care, including satisfactory new vehicle dealer sales and service facilities, special and essential tools and equipment, replacement parts supply, and qualified management, sales, and service personnel, for the new motor vehicle products of the line make and whether sufficient qualified management, sales, and trained service personnel to satisfy the reasonable requirements of the manufacturer or distributor for the other existing franchisees and the additional franchisee are available in that relevant market area;
(v) Whether it is injurious or beneficial to the public welfare for an additional franchise to be established;
(vi) Whether the franchises for the same line make in that relevant consumption area are providing adequate competition and convenient customer care for the vehicles of the line make in the market area, which shall include the adequacy of vehicle sales and service facilities, equipment, supply of vehicle parts, and qualified service personnel;
(vii) Whether the establishment of an additional franchise would increase competition and be in the public interest; and
(viii) Whether the manufacturer’s or distributor’s action is in good faith.

Legislative History

[49-1617, added 2023, ch. 122, sec. 3, p. 350.]