§ 4 — Violations

Section 4. (a) It shall be a violation of subsection (a) of section 3 for any manufacturer, distributor, franchisor representative or motor vehicle dealer to engage in any action which is arbitrary, in bad faith, or unconscionable and which causes damage to the manufacturer, distributor, franchisor representative, motor vehicle dealer or to the public.(b) It shall be a violation of subsection (a) of section 3 for a manufacturer, distributor or franchisor representative, to coerce, any motor vehicle dealer:(1) to accept or buy any motor vehicle, appliance, equipment, part or accessory, or any other commodity or service which has not been ordered or requested by the motor vehicle dealer; or to require a motor vehicle dealer to accept, buy, order or purchase a motor vehicle, appliance, equipment, optional part or accessory, or any commodity or service or anything of value whether supplied or rendered by the manufacturer, distributor or franchisor representative in order to obtain any motor vehicle or any other commodity which has been ordered or requested by the motor vehicle dealer.(2) to order or accept delivery of any motor vehicle with special features, appliances, accessories or equipment not included in the list price of the motor vehicles as publicly advertised by the manufacturer or distributor thereof.(3) to order for any person and require acceptance of any parts, accessories, equipment, machinery, tools, appliances or any commodity whatsoever.(c) It shall be deemed a violation of subsection (a) of section 3 for a manufacturer, distributor or franchisor representative:(1) to adopt, change, establish or implement a plan or system for the allocation or distribution of new motor vehicles to motor vehicle dealers which is arbitrary or unfair or to modify an existing plan so as to cause the same to be arbitrary or unfair; but it shall not be a violation of this paragraph for a manufacturer or distributor to maintain a pool of new motor vehicles in a reasonable quantity that are not included in the regular allocation, subject to the following limitations:(i) the quantity of new motor vehicles selected by the manufacturer or distributor to include in the pool shall not exceed 15 per cent of all new motor vehicles that would otherwise be available in the current allocation and shall not exceed 15 per cent of any given model based on all new motor vehicles that would otherwise be available in the current allocation; and(ii) new motor vehicles in the pool may be distributed in the discretion of the manufacturer or distributor for any business purpose that the manufacturer or distributor considers appropriate; provided, however, that such distribution is not in violation of paragraphs (5) or (6); but in distributing new motor vehicles from the pool to any dealership in which the manufacturer or distributor has an ownership or real estate interest, the manufacturer or distributor shall not exercise its discretion based solely on the fact that the manufacturer or distributor has an ownership or real estate interest in any dealership.(2) to fail or refuse to advise or disclose to any motor vehicle dealer having a franchise agreement, upon written request therefor, the methodology upon which new motor vehicles of the same line make are allocated or distributed to motor vehicle dealers in the commonwealth and the methodology upon which the current allocation or distribution is being made or will be made to a motor vehicle dealer; but this paragraph shall not apply to any vehicles included in the pool of new motor vehicles described in paragraph (1).(3) to refuse to deliver in reasonable quantities and within a reasonable time after receipt of an order by any motor vehicle dealer having a franchise agreement for the retail sale of new motor vehicles sold or distributed by the manufacturer or distributor, any motor vehicles covered by the franchise publicly advertised in media broadcast or distributed in the commonwealth by the manufacturer or distributor to be available for immediate delivery; but the failure to deliver any motor vehicle shall not be considered a violation of this chapter if the failure is due to an act of God, work stoppage or delay due to a strike or labor difficulty, shortage of materials, lack of available manufacturing capacity, freight embargo or a cause over which the manufacturer or distributor has no control.(4) to coerce any motor vehicle dealer to enter into any agreement with the manufacturer, distributor or franchisor representative, or to do any other act prejudicial to the dealer, by threatening to terminate any franchise agreement; but, notice in good faith, including notice of termination or nonrenewal, to any motor vehicle dealer based on the dealer's violation of any terms or provisions of its franchise agreement or of any law or regulation applicable to the conduct of a motor vehicle dealership, or petitioning any court for a declaration that the notice is issued for good cause, shall not constitute a violation of this chapter.(5) to offer to sell or to sell any new motor vehicle to any motor vehicle dealer located in the commonwealth at a lower actual price therefor than the actual price offered contemporaneously to any other motor vehicle dealer located in the commonwealth for the same model vehicle similarly equipped or to utilize any device including, but not limited to, sales promotion plans or programs which result in the lesser actual price unless available on equal terms to all dealers located in the commonwealth; provided, however, that this paragraph shall not apply to sales to a motor vehicle dealer for resale to any unit of the federal government or any agency thereof or to the commonwealth or any of its political subdivisions; provided further, that this paragraph shall not apply to sales to a motor vehicle dealer of any motor vehicle ultimately sold, donated or used by the dealer in a driver education program. The preceding provisions of this paragraph shall not apply so long as a manufacturer, distributor or franchisor representative offers to sell or sells new motor vehicles to all motor vehicle dealers located in the commonwealth at an equal price. In connection with a sale of a motor vehicle or vehicles to a motor vehicle dealer for resale to any unit of the federal government or any agency thereof or to the commonwealth or to any political subdivision thereof, no manufacturer or distributor shall offer any discounts, refunds or any other similar type of inducement to any dealer without making the same offer available to all other of its dealers within the relevant market area, and if the inducements are made, the manufacturer or distributor shall give simultaneous notice thereof to all of its dealers within the relevant market area.(6) to offer to sell or to sell any new motor vehicle to any person located in the commonwealth, except a distributor, at a lower actual price therefor than the actual price offered and charged contemporaneously to a motor vehicle dealer located in the commonwealth for the same model vehicle similarly equipped or to utilize any device which results in such lesser actual price unless the same is available on equal terms to all dealers located in the commonwealth; but this paragraph shall not apply to sales by a manufacturer or distributor to any unit of the federal government or any agency thereof or to the commonwealth or any of its political subdivisions.(7) to offer to sell or to sell parts or accessories to any new motor vehicle dealer located in the commonwealth for use in its own business for the purpose of repairing or replacing the same or a comparable part or accessory, at a lower actual price therefor than the actual price charged contemporaneously to any other new motor vehicle dealer located in the commonwealth for similar parts or accessories for use in its own business; but in those cases where motor vehicle dealers operate and serve as wholesalers of parts and accessories to retail outlets, nothing herein contained shall be construed to prevent a manufacturer or distributor from selling to a motor vehicle dealer who operates and serves as a wholesaler of parts and accessories, the parts and accessories ordered by said motor vehicle dealer for resale to retail outlets at a lower actual price than the actual price charged a motor vehicle dealer who does not operate or serve as a wholesaler of parts and accessories.(8) to impose upon a motor vehicle dealer or a director, officer, partner or stockholder thereof or any other person holding or otherwise owning an interest therein, by or through the terms and provisions of a franchise agreement or otherwise, unreasonable restrictions upon the financial arrangement or structure of a dealership, upon the method and manner by which the dealership finances or intends to finance its operation, equipment and facilities or upon the ability of an individual, proprietor or stockholder to use, sell or transfer any interest in the dealership or to enter into and implement a testamentary arrangement with respect thereto; provided, however, that:(i) a manufacturer or distributor may require a director, officer, partner or stockholder of a motor vehicle dealer, or any other person holding or otherwise owning an interest therein, to be identified as such and may establish reasonable standards concerning the capital and facilities needed for dealership operations and concerning continuity of dealership management;(ii) there shall be no assignment, delegation or transfer of the franchise or management or control thereunder without the written consent of the manufacturer or distributor, which consent shall not unreasonably be withheld;(iii) the manufacturer or distributor shall not deny to the surviving spouse or heirs of an individual franchised motor vehicle dealer the right to submit a proposal as provided in this section to succeed to the interest of the decedent in a franchised motor vehicle dealership enterprise or directly or indirectly to interfere with, hinder or prevent the continuance of the business of the franchised motor vehicle dealer by reason of such succession to the interest of the decedent during the pendency of any such proposal; provided, however, that the surviving spouse or heirs submit that proposal within 90 days after the decedent's death and provide all information requested by the manufacturer or distributor in a timely manner, including the familial and business relationship of the parties, and the continuation of the business of the franchised motor vehicle dealer shall be conducted under competent management acceptable to the franchisor, whose acceptance shall not be unreasonably withheld; but, in the event that the franchised motor vehicle dealer and franchisor have executed an agreement concerning succession rights prior to the individual dealer's, partner's or stockholder's death and if such agreement has not been revoked by the franchised motor vehicle dealer, the agreement shall control even if it designates an individual other than the surviving spouse or heirs of the decedent;(iv) the manufacturer or distributor shall promptly mail a dealership application to a proposed assignee, delegatee or transferee following a request submitted by the proposed assigning, delegating or transferring motor vehicle dealer and the proposed assignee, delegatee or transferee shall submit the application to the manufacturer or distributor with all supporting documentation as specified by the manufacturer or distributor; and the manufacturer or distributor shall, within 30 days of receipt of the application and all supporting documentation as specified therein, review it and notify the assignee, delegatee or transferee what additional information, data or documents, if any, is needed by the manufacturer or distributor to complete its review and, upon the submission of all specified additional information, data or documents by the assignee, delegatee or transferee, the manufacturer or distributor shall, within 30 days after receipt, make its decision to approve or reject the proposed sale, assignment, or transfer; provided, however, that if the manufacturer or distributor does not reject such application within 30 days after the submission of all of the requested additional information, data or documents, the application shall be considered approved for all purposes, unless the 30–day deadline is extended by mutual agreement of the manufacturer or distributor and the proposed assigning, delegating or transferring dealer; provided, further, that if the manufacturer or distributor did not request any additional information, data or documents, the manufacturer or distributor shall, within 60 days of the receipt of the application and all supporting documentation, review the application and approve or reject it but, if the manufacturer or distributor does not reject the application within that 60–day period and the 60–day period is not otherwise extended by mutual agreement of the manufacturer or distributor and the proposed assigning, delegating or transferring dealer, the application shall be considered approved for all purposes; and(v) if a franchise agreement specifies that the consent of the manufacturer or distributor shall be obtained before a dealer engages in dualing, the consent shall not be unreasonably withheld, but nothing in this clause shall modify or supersede any term of a franchise agreement requiring a dealer to maintain an exclusive facility for its operations.(9) to obtain money, goods, services, anything of value, or any other benefit from any other person with whom the motor vehicle dealer does business, on account of or in relation to the transactions between the dealer and the other person as compensation except for services actually rendered, unless the benefit is promptly accounted for and transmitted to the motor vehicle dealer.(10) to own or operate, either directly or indirectly through any subsidiary, parent company or firm, a motor vehicle dealership located in the commonwealth of the same line make as any of the vehicles manufactured, assembled or distributed by the manufacturer or distributor. A manufacturer or distributor shall not be in violation of this paragraph when: (i) owning or operating a dealership temporarily for a reasonable period, in any case not to exceed 1 year; (ii) in a bona fide relationship in which an independent person is required to make an initial ownership investment subject to loss in the dealership of not less than 7 per cent of the equity investment and can be reasonably expected, pursuant to a bona fide written agreement in effect between the manufacturer or distributor and the independent person, to acquire full ownership of the dealership on reasonable terms and conditions and within a reasonable period of time not to exceed 12 years unless good cause exists to extend said 12 year time period; provided, however, that the source for said initial ownership investment shall be from investors or lenders other than the manufacturer or distributor holding an ownership in the dealership; and provided, further, that for the purposes of clause (ii), good cause shall mean circumstances that are beyond the reasonable control of the independent person or the manufacturer or distributor holding an ownership in the dealership; (iii) owning or operating a dealership selling recreational vehicles temporarily during the transition from one owner of the dealership to another that the temporary period may be extended in 1 year increments for a maximum extension up to 2 years, if good cause is shown; provided, further, that the manufacturer or distributor who owns or operates a dealership selling recreational vehicles upon owning or operating the dealership shall immediately make a reasonable effort to notify all dealerships selling recreational vehicles in the commonwealth that the dealership is for sale, the earliest date that the manufacturer took ownership or began operating the dealership and the contact person to arrange the sale of the dealership; provided, further, that upon written request to a manufacturer or distributor by a dealer of the same line make as a dealership established under clause (ii), the manufacturer or distributor shall send the requesting dealer a written statement verifying that the relationship with the independent person is in compliance with this paragraph; and provided, further, that the manufacturer or distributor shall not disclose any personal or financial information of the independent person or dealership.(11) to coerce a motor vehicle dealer to assent to a release, assignment, novation, waiver or estoppel which would prospectively relieve any person from liability imposed by this chapter.(12) to act to accomplish, either directly or indirectly through any parent company, subsidiary, or agent, what would otherwise be prohibited under this chapter on the part of the manufacturer or distributor. This section shall not limit the right of any parent company, subsidiary, or agent to engage in business practices otherwise lawful in accordance with the usage of the trade in which it is engaged.(d) It shall be a violation of subsection (a) of section 3 for a motor vehicle dealer:(1) to require a purchaser of a new motor vehicle, as a condition of sale and delivery thereof, to also purchase special features, appliances, equipment, parts or accessories not desired or requested by the purchaser; provided, however, that this prohibition shall not apply as to special features, appliances, equipment, parts or accessories which are already installed on the motor vehicle when received by the dealer; provided further, that the motor vehicle dealer prior to the consummation of the purchase reveals to the purchaser the substance of this paragraph;(2) to represent and sell as a new motor vehicle any motor vehicle which has been used and operated for demonstration purposes or which is otherwise a used motor vehicle; or(3) to assign, delegate or transfer its franchise agreement, or any ownership interest or management control in the dealership, without the prior written consent of the manufacturer or distributor, which consent shall not unreasonably be withheld.[Paragraph (4) of subsection (d) added by 2022, 179, Sec. 46 contingently effective as provided by 2022, 179, Sec. 96.]

(4) to sell in-state any new vehicle that is not a zero-emission vehicle. For the purposes of this paragraph, ''vehicle'' shall mean a passenger car or light duty truck and ''zero-emission vehicle'' shall have the same meaning as defined in section 16 of chapter 25A.