§ 463 — Unfair business practices by franchisors

§ 463. Unfair business practices by franchisors. 1. It shall be\nunlawful for any franchisor to directly or indirectly coerce or attempt\nto coerce any franchised motor vehicle dealer:\n (a) To order or accept delivery of any motor vehicle or vehicles,\nappliances, tools, machinery, equipment, parts or accessories therefor\nor any other commodity or commodities which shall not have been\nvoluntarily ordered by said franchised motor vehicle dealer except any\nsuch items required by a recall campaign.\n (b) To order or accept delivery of any motor vehicle with special\nfeatures, appliances, accessories or equipment not included in the list\nprice of said motor vehicle as publicly advertised by the franchisor.\n (c) To contribute or pay money or anything of value into any\ncooperative or other advertising program or fund unless such program or\nfund shall be controlled by a dealer or group of dealers.\n (d) To participate in any training program unless such program is\nexpressly limited to specific information necessary to sell or service\nthe models of vehicles the dealer is authorized to sell or service under\nthe dealer's franchise with that franchisor. A franchisor shall not\nunreasonably require an owner or dealer principal of a dealership to\nattend any meeting or training program. A franchisor who requires\nparticipation in a training program as authorized by this paragraph\nshall to the largest extent practicable make all reasonable efforts to\nlimit or reimburse the expenses of a dealer incurred in attending such\nprogram. Nothing in this paragraph shall be deemed to prohibit any\ntraining program located within a dealer's own principal place of\nbusiness.\n (e) To sell, or sell exclusively an extended service contract,\nextended maintenance plan or similar product, including, but not limited\nto, gap products offered, endorsed or sponsored by the franchisor by the\nfollowing means:\n (1) by a statement made by the franchisor that failure to do so will\nsubstantially and adversely impact the dealer; or\n (2) by a provision in a franchise agreement that the dealer sell, or\nsell exclusively an extended service contract, extended maintenance plan\nor similar product offered, endorsed or sponsored by the franchisor; or\n (3) by measuring the dealer's performance under the franchise based on\nthe sale of extended service contracts, extended maintenance plans or\nsimilar products offered, endorsed or sponsored by the manufacturer or\ndistributor; or\n (4) by requiring the dealer to exclusively promote the sale of\nextended service contracts, extended maintenance plans or similar\nproducts offered, endorsed or sponsored by the franchisor.\n Nothing in this section shall prohibit a franchisor from:\n (A) providing incentives to a dealer that makes the voluntary decision\nto sell or sell exclusively an extended service contract, extended\nmaintenance plan or similar product, including, but not limited to, gap\nproducts offered, endorsed or sponsored by the franchisor, or\n (B) requiring that a dealer that sells an extended service contract,\nextended maintenance plan, or similar product that is not offered,\nendorsed or sponsored by the franchisor, disclose to the consumer the\ndisclosures required under section seven thousand nine hundred five of\nthe insurance law, and a separate statement, acknowledged by the\nconsumer, that the extended service contract, extended maintenance plan\nor similar product is not offered, endorsed or sponsored by the\nfranchisor, if that is the case.\n 2. It shall be unlawful for any franchisor, notwithstanding the terms\nof any franchise contract:\n (a) To refuse to deliver in reasonable quantity and within a\nreasonable time after receipt of a dealer's order to any franchised\nmotor vehicle dealer any vehicle covered by such franchise which is\npublicly advertised by such franchisor to be available for immediate\ndelivery. Provided, however, the failure to deliver any motor vehicle\nshall not be considered a violation of this article if such failure be\ndue to acts of God, work stoppages or delays due to strikes or labor\ndifficulties, freight embargoes, shortage of materials, a lack of\nmanufacturing capacity or other causes over which the franchisor shall\nhave no control.\n (b) To directly or indirectly coerce or attempt to coerce any\nfranchised motor vehicle dealer to enter into any agreement with such\nfranchisor or officer, agent or other representative thereof, or to do\nany other act prejudicial to the monetary interests or property rights\nof said dealer by threatening to terminate said dealer. Provided,\nhowever, that good faith notice to any franchised motor vehicle dealer\nof said dealer's violation of any terms or provisions of such franchise\nshall not constitute a violation of this article.\n (c) (1) To condition the renewal or extension of a franchise on a\nfranchised motor vehicle dealer's substantial renovation of the dealer's\nplace of business or on the construction, purchase, acquisition or\nrental of a new place of business by the franchised motor vehicle dealer\nunless the franchisor has advised the franchised motor vehicle dealer in\nwriting of its intent to impose such a condition within a reasonable\ntime prior to the effective date of the proposed date of renewal or\nextension (but in no case less than one hundred eighty days) and\nprovided the franchisor demonstrates the need for such change in the\nplace of business and the reasonableness of such demand in view of the\nneed to service the public and the economic conditions existing in the\nautomobile industry at the time such action would be required of the\nfranchised motor vehicle dealer. As part of any such condition the\nfranchisor shall agree, in writing, to supply the dealer with a\nreasonable quantity and mix of additional new motor vehicles which, as\ndetermined by a reasonable analysis of market conditions, are projected\nto meet the sales levels necessary to support the increased overhead\nincurred by the franchised motor vehicle dealer by reason of such\nrenovation, construction, purchase, acquisition or rental of a new place\nof business.\n (2) To require a franchised motor vehicle dealer to purchase goods,\nbuilding materials, or services for the dealer's place of business,\nincluding, but not limited to, office furniture, design features,\nflooring, and wall coverings, from a vendor chosen by the franchisor if\ngoods, building materials, or services of substantially similar quality\nand design are available from other sources, provided, however, that the\ngoods or building materials are not subject to the franchisor's\nintellectual property or trademark rights and the franchised motor\nvehicle dealer has received the franchisor's approval, which approval\nmay not be unreasonably withheld. Nothing in this subdivision shall be\nconstrued to allow a franchised motor vehicle dealer to impair or\neliminate a franchisor's intellectual property or trademark rights and\ntrade dress usage guidelines, or to impair other intellectual property\ninterests owned or controlled by the franchisor.\n (3) Except as necessary to comply with a health or safety law, or to\ncomply with a technology requirement, which is necessary to sell or\nservice a motor vehicle that the franchised motor vehicle dealer is\nauthorized or licensed by the franchisor to sell or service, to require\na franchised motor vehicle dealer to construct a new dealer facility or\nsubstantially alter or remodel an existing dealer facility before the\ndate that is ten years after the date the construction of the new dealer\nfacility or such alteration or remodeling at that location was completed\nand shall continue with any successor owner provided such owner has been\ndesignated and approved by the franchisor in the franchise agreement,\nand such construction, alteration or remodeling substantially complied\nwith the franchisor's brand image standards or plans that the franchisor\nprovided at the time the construction, alteration, or remodeling was\ncompleted.\n (i) As used in this subparagraph, "substantially alter":\n (A) refers to an alteration that has a major impact on the\narchitectural features, characteristics, or integrity of a structure or\nlot; and\n (B) does not include routine maintenance, such as interior painting,\nreasonably necessary to keep a dealership facility in attractive\ncondition.\n (ii) Nothing in this paragraph shall prohibit a franchisor from:\n (A) continuing a facility improvement program that is in effect as of\nthe effective date of this paragraph with more than one franchised motor\nvehicle dealer in the state or to renewing or modifying such program; or\n (B) providing lump sum or regularly-scheduled payments to assist a\nfranchised motor vehicle dealer in making a facility improvement,\nincluding construction, alteration or remodeling, or installing signage\nor a franchisor image element;\n (C) providing reimbursement to a franchised motor vehicle dealer on\nreasonable, written terms for a portion of the franchised motor vehicle\ndealer's cost of making a facility improvement, including construction,\nalteration or remodeling, the purchase of goods, building materials or\nservices, or installing signage or a franchisor image element.\n (4) To deny a franchised motor vehicle dealer a franchisor image\nelement payment, incentive or allowance if the franchised motor vehicle\ndealer, with the franchisor's approval, began construction, alterations\nor remodeling intended to comply with the franchisor's image element\nprogram before the franchisor substantially changed or terminated the\nprogram prior to the program's scheduled ending date provided the dealer\nis otherwise eligible for program payments and provided that after such\nsubstantial change or termination, the compensation payable to the\ndealer shall be limited to image element payments, incentives or\nallowances that the dealer would have earned through program's scheduled\nending date, provided that the dealer complies with all program\nrequirements, and provided, further, that such program or payments are\nnot otherwise prohibited by law or regulation.\n (5) To require or attempt to require a franchised motor vehicle dealer\nto establish or maintain exclusive dealership facilities unless\njustified by current and reasonably expected future economic conditions\nexisting in the dealer's relevant market area at the time the request\nfor exclusive facilities is made; provided that the foregoing shall not\nrestrict the terms and conditions of any agreement for which the dealer\nhas voluntarily accepted valuable consideration separate from the\nfranchised motor vehicle dealer's right to sell and service motor\nvehicles for the franchisor. The fact that local market share, facing\ncompetitive brand dealerships have exclusive dealership facilities shall\nconstitute evidence that current economic conditions may justify the\nrequirement to establish and maintain exclusive dealership facilities.\n (6) To require a site control provision regarding the dealer's place\nof business to survive or continue after the termination of such\ndealer's franchise if the termination is due to the discontinuation of\nthe line-make that was the subject of the agreement.\n (d) (1) To terminate, cancel or refuse to renew the franchise of any\nfranchised motor vehicle dealer except for due cause, regardless of the\nterms of the franchise. A franchisor shall notify a franchised motor\nvehicle dealer, in writing, of its intention to terminate, cancel or\nrefuse to renew the franchise of such dealer at least ninety days before\nthe effective date thereof, stating the specific grounds for such\ntermination, cancellation or refusal to renew. In no event shall the\nterm of any such franchise expire without the written consent of the\nfranchised motor vehicle dealer involved prior to the expiration of at\nleast ninety days following such written notice except as hereinafter\nprovided.\n (2) A change in ownership of a manufacturer or distributor that\ncontemplates a continuation of that line make in the state shall not\ndirectly or indirectly, through actions of any parent of the\nmanufacturer or distributor, subsidiary of the manufacturer or\ndistributor, or common entity cause a termination, cancellation, or\nnonrenewal of a dealer agreement by a present or previous manufacturer\nor distributor of an existing agreement unless the manufacturer or\ndistributor offers the new vehicle dealer an agreement substantially\nsimilar to that offered to other dealers of the same line make.\n (3) The provisions of subparagraphs one and two of this paragraph\nnotwithstanding, a franchisor may terminate its franchise with a\nfranchised motor vehicle dealer upon at least fifteen days written\nnotice upon the occurrence of any of the following: (i) conviction of a\nfranchised motor vehicle dealer, or one of its principal owners, of a\nfelony or a crime punishable by imprisonment which substantially\nadversely affects the business of the franchisor, or (ii) the failure of\nthe franchised motor vehicle dealer to conduct its customary sales and\nservice operations for a continuous period of seven business days,\nexcept for acts of God or circumstances beyond the direct control of the\nfranchised motor vehicle dealer or when any license required by the\nfranchised motor vehicle dealer is suspended for a period of thirty days\nor less, or (iii) insolvency of the franchised motor vehicle dealer, or\nfiling of any petition by or against the franchised motor vehicle dealer\nunder any bankruptcy or receivership law.\n (e) (1) Any franchised motor vehicle dealer who receives a written\nnotice of termination or a written notice of a franchisor's demand that\nthe dealer substantially renovate an existing place of business, or buy,\nconstruct or rent a new place of business as a condition of franchise\nrenewal or extension may have a review of the demand to change the place\nof business or the threatened termination by instituting an action, as\nprovided in section four hundred sixty-nine of this article. If such\naction is commenced within four months of receipt of notice, such action\nshall serve to stay, without bond, the proposed termination or\nrenovation or demand to change the place of business until the final\njudgment has been rendered in an adjudicatory proceeding or action, as\nprovided in section four hundred sixty-nine of this article.\n (2) The issues to be determined in an action commenced pursuant to\nsubparagraph one of this paragraph are whether the franchisor's notice\nof termination was issued with due cause and in good faith. The burden\nof proof shall be upon the franchisor to prove that due cause and good\nfaith exist. The franchisor shall also have the burden of proving that\nall portions of its current or proposed sales and service requirements\nfor the protesting franchised new motor vehicle dealer are reasonable.\n The determination of due cause shall be that there exists a material\nbreach by a new motor vehicle dealer of a reasonable and necessary\nprovision of a franchise if the breach is not cured within a reasonable\ntime after written notice of the breach has been received from the\nmanufacturer or distributor.\n (3) The franchisor shall provide notification in writing to the dealer\nthat the dealer has one hundred eighty days to correct dealer sales and\nservice performance deficiencies or breaches and that the franchise is\nsubject to termination under this section if the dealer does not correct\nthose deficiencies or breaches. If the termination is based upon\nperformance of the dealer in sales and service then there shall be no\ndue cause if the dealer substantially complies with the reasonable\nperformance provisions of the franchise during such cure period and, no\ndue cause if the failure to demonstrate such substantial compliance was\ndue to factors which were beyond the control of such dealer.\n (f) To intentionally resort to or use any false or misleading\nadvertisements.\n (g) To sell or offer to sell any new motor vehicle to any franchised\nmotor vehicle dealer at a lower actual price therefor than the actual\nprice offered to any other franchised motor vehicle dealer for the same\nmodel vehicle similarly equipped or to utilize any device including, but\nnot limited to, sales promotion plans or programs which result in such\nlesser actual price. Provided, however, the provisions of this paragraph\nshall not apply to sales to a franchised motor vehicle dealer for: (i)\nresale to any unit of government; or (ii) donation or use by said dealer\nin a driver education program. This paragraph shall not be construed to\nprevent the offering of incentive programs or other discounts provided\nsuch incentives or discounts are reasonably available to all franchised\nmotor vehicle dealers in this state on a proportionately equal basis.\n (h) To sell or offer to sell any new motor vehicle to any person,\nexcept a distributor, at a lower actual price therefor than the actual\nprice offered and charged to a franchised motor vehicle dealer for the\nsame model vehicle similarly equipped or to utilize any device which\nresults in such lesser actual price.\n (i) To sell or offer to sell parts and/or accessories to any\nfranchised motor vehicle dealer at a lower actual price therefor than\nthe actual price offered to any other franchised motor vehicle dealer\nfor similar parts and/or accessories for use in his own business.\nProvided, however, that nothing herein contained shall be construed to\nprevent a manufacturer or distributor, or any agent thereof, from\nselling to a franchised motor vehicle dealer, who operates and serves as\na wholesaler of parts and accessories, such parts and accessories as may\nbe ordered by such franchised motor vehicle dealer for resale to retail\noutlets at a lower actual price than the actual price offered a\nfranchised motor vehicle dealer who does not operate or serve as a\nwholesaler of parts and accessories. This paragraph shall not be\nconstrued to prevent the offering of incentive programs or other\ndiscounts provided the franchisor demonstrates that such incentives or\ndiscounts are reasonably available to all franchised motor vehicle\ndealers in the state on a proportionately equal basis.\n (j) To prevent or attempt to prevent, by contract or otherwise, any\nfranchised motor vehicle dealer from changing the capital structure of\nits dealership, or the means by or through which it finances the\noperation of its dealership, or finances the acquisition or retention of\ninventory, provided the dealer at all times meets any capital standards\nagreed to between the dealer and the franchisor and as applied by the\nfranchisor to all other comparable franchised motor vehicle dealers of\nthe franchisor located within the state.\n (k) To unreasonably withhold consent to the sale or transfer of an\ninterest, in whole or in part, to any other person or party by any\nfranchised motor vehicle dealer or any partner or stockholder of any\nfranchised motor vehicle dealer. If such consent to sale or transfer\nshall be withheld by the franchisor, the franchisor shall provide\nspecific reasons for its withholding of consent within sixty days of\nreceipt of the request for such consent provided such request is\naccompanied by proper documentation as may reasonably be required by the\nfranchisor. Upon receipt of notice and reasons for the franchisor's\nwithholding of consent, the franchised motor vehicle dealer may within\none hundred twenty days have a review of the manufacturer's decision as\nprovided in section four hundred sixty-nine of this article.\n (l) To require a franchised motor vehicle dealer to assent to a\nrelease, assignment, novation, waiver or estoppel which would relieve\nany person from liability imposed under this article, provided that this\nparagraph shall not be construed to prevent a franchised motor vehicle\ndealer from entering into a valid release or settlement agreement with a\nfranchisor.\n (m) (1) To deny to the surviving spouse or heirs of an individual\nfranchised motor vehicle dealer or of a partner of an unincorporated\nfranchised motor vehicle dealer or of a stockholder of a corporate\nfranchised motor vehicle dealer the right to succeed to the interest of\nthe decedent in such franchised motor vehicle dealership enterprise or\ndirectly or indirectly to interfere with, hinder or prevent the\ncontinuance of the business of the franchised motor vehicle dealer by\nreason of such succession to the interest of the decedent. Provided,\nhowever, that the continuation of the business of the franchised motor\nvehicle dealer shall be conducted under competent management acceptable\nto the franchisor, whose acceptance shall not be unreasonably withheld.\n (2) Notwithstanding the foregoing, in the event the franchised motor\nvehicle dealer and franchisor have duly executed an agreement concerning\nsuccession rights prior to the individual dealer's, partner's or\nstockholder's death and if such agreement has not been revoked by the\nfranchised motor vehicle dealer, such agreement shall be observed, even\nif it designates an individual other than the surviving spouse or heirs\nof the decedent.\n (n) To fail to indemnify and hold harmless its franchised motor\nvehicle dealers against any losses or damages including, but not limited\nto, court costs and attorneys' fees arising out of actions, claims or\nproceedings including, but not limited to, those based upon strict\nliability, negligence, misrepresentation, warranty (expressed or\nimplied) or revocation as described in section 2-608 of the uniform\ncommercial code, where the action, claim or proceeding directly relates\nto the manufacture, assembly or design of new motor vehicles, parts or\naccessories or other functions of the franchisor including, without\nlimitation, the selection by the franchisor of parts or components for\nthe vehicle or any damages to merchandise or vehicles occurring in\ntransit where the carrier is designated by the franchisor,\nnotwithstanding the terms of any franchise. If the action, claim or\nproceeding includes independent allegations against the franchised motor\nvehicle dealer, the franchisor shall bear only that portion of the\ncosts, fees and judgment which is directly related to the manufacture,\nassembly or design of the vehicle, parts or accessories, or other\nfunction of the franchisor beyond the control of the franchised motor\nvehicle dealer.\n (o) (1) Upon a termination of a franchise by a franchisor or\nfranchised motor vehicle dealer under this article, to refuse to accept\na return of new and unused current model motor vehicle inventory which\nhas been acquired from the franchisor, new and unused noncurrent model\nmotor vehicle inventory which has been acquired from the franchisor\nwithin one hundred eighty days of the effective date of the termination;\nsupplies, parts, equipment, signage, special tools, and furnishings\npurchased from the franchisor or its approved sources. The obligation of\nthe franchisor, except with respect to signage shall be limited to the\nrepurchase of the above property which is unaltered and undamaged, in\ngood and useable condition, and, in the case of supplies, parts and\nequipment to those items which are currently listed in the franchisor's\nsupplies and parts list. In the case of signage, the franchisor shall be\nobligated to repurchase any franchisor required signage, purchased\nwithin the five years preceding termination and which is in good and\nuseable condition less depreciation as set forth in the Internal Revenue\nCode of one-fifteenth of the initial cost per year starting the year\nfollowing the dealer's acquisition of the item. Furthermore, the\nobligation of the franchisor to repurchase supplies upon a termination,\ncancellation or nonrenewal by a franchised motor vehicle dealer shall be\nlimited to supplies mandated by the franchisor. Parts eligible for\nrepurchase shall include parts which have been renumbered in the current\nparts list but which are identical in design and material to the\ncurrently numbered part. The return rights afforded the franchised motor\nvehicle dealer under the provisions of the paragraph shall be in\naddition to those, if any, provided in the franchise agreement.\n (2) The franchisor shall pay fair and reasonable compensation for the\nabove described property upon repurchase. In the case of new motor\nvehicle inventory, accessories and parts, fair and reasonable\ncompensation shall in no instance be less than the net acquisition price\npaid by the franchised motor vehicle dealer to the franchisor or its\napproved sources. Upon a termination of a franchise by a franchisor,\nwithin thirty days of such termination, the franchisor shall send to the\nfranchised motor vehicle dealer instructions on the methodology by which\nthe franchised motor vehicle dealer must ship the above described\nproperty to the franchisor; the franchisor shall then remit payment for\nsuch property to the franchised motor vehicle dealer within sixty days\nafter receipt of such property.\n (3) Upon a termination of a franchise by a franchised motor vehicle\ndealer where the franchise consists primarily of the distribution and\nsale of house coaches, the franchisor's repurchase obligations set forth\nin this paragraph shall not apply.\n (4) In addition to any other requirements of this subdivision, in the\nevent a franchisor terminates a franchise due to termination of a line\nmake, the franchisor shall compensate the dealer for any franchisor\nrequired facility construction, alterations or remodeling, or\nconstruction, alterations or remodeling required for participation in\nany incentive programs which were completed by the dealer within three\nyears of the date the franchisor announced the termination of the line\nmake. For the purposes of this section, completion shall be deemed to\noccur at the later of the franchisor's final approval of the\nconstruction, alterations, or remodeling or the issuance of a\ncertificate of occupancy. The compensation required under this section\nshall be in an amount equal to the dealer's cost for the facility\nupgrades less any assistance provided to the dealer within three years\nof the date the franchisor announced the termination of the line make by\nthe manufacturer or distributor, and less the amount for depreciation as\nset forth in Internal Revenue Code of one thirty-ninth of the total\ninitial cost of such construction, alterations, or remodeling per year\nstarting the year following the dealer's completion of the facility\nconstruction, alterations, or remodeling.\n (5) In addition to the requirements of subparagraph four of this\nparagraph, in the event a franchisor terminates a franchise due to a\ntermination of a line make, the franchisor shall compensate the dealer\nin an amount equal to the amount remaining on the terminated dealer's\nmanagement computer system lease or contract, or one year of lease\npayments, whichever is less if the dealer management computer system\nwill no longer be utilized as a result of the termination and the\nfranchisor required the dealer to utilize the particular dealer\nmanagement computer system.\n (p) To refuse to repurchase for cost, including transportation\ncharges, a new vehicle which has been substantially damaged by the\nfranchisor or its agent; or to sell or transfer to a franchised motor\nvehicle dealer a new motor vehicle which has been subjected to repairs\nwith a retail value in excess of five percent of the lesser of the\nmanufacturer's or distributor's suggested retail price where such\nrepairs are performed after shipment from the franchisor including\ndamage to the vehicle while in transit without so notifying the\nfranchised motor vehicle dealer to whom such new motor vehicle so\nrepaired is sold or transferred. Such notice shall be in writing, advise\nof such repairs, and be provided prior to the receipt of any payment for\nsuch motor vehicle. If the franchisor shall fail to provide such notice,\nany franchised motor vehicle dealer suffering a loss by reason of such\nfailure shall be entitled to reimbursement from the franchisor who\nfailed to provide such notice.\n (q) To provide directly or to grant to any person the right to perform\nwarranty or recall service on any new motor vehicle line other than a\nhouse coach line but deny to said person the right to purchase the motor\nvehicles of that line for resale to consumers in this state as new motor\nvehicles provided, however, that this paragraph shall not prohibit a\nfranchisor from:\n (1) authorizing warranty service by employees of a fleet operator or\ngovernmental entity on owned vehicles; or\n (2) authorizing such other persons to perform warranty service as the\nfranchisor deems necessary to protect its interests as they may be\naffected by section one hundred ninety-eight-a of the general business\nlaw.\n A "fleet operator" shall be required to own for its own use or for the\nuse of others the minimum number of vehicles of the current or preceding\nmodel year manufactured or sold by the same franchisor as determined by\nthe standards of such franchisor applied on a general and consistent\nbasis to substantially all fleet operators. Notwithstanding the\npreceding, a franchisor which withdraws from the United States market\nshall continue to allow its former franchised motor vehicle dealers to\ncontinue servicing and supplying parts, including service and parts\nsupplied under the franchisor's warranty to vehicle owners, for a period\nof at least five years after such withdrawal from the United States\nmarket.\n (r) To establish or attempt to establish the actual resale price for\nany new motor vehicle, part or accessory charged by a franchised motor\nvehicle dealer in the state, provided, however, nothing contained herein\nshall prohibit publication of recommended resale prices or historical\ninformation by a franchisor.\n (s) To grant a commission to any person other than a franchised motor\nvehicle dealer within the state involved in the sale of a new motor\nvehicle by such franchised motor vehicle dealer without said franchised\nmotor vehicle dealer's written consent. This prohibition shall not apply\nto sales incentive programs for employees of franchised motor vehicle\ndealers as long as the payments are made by the franchisor to such\nemployees and not charged to the dealer.\n (t) To require or attempt to require by the terms of the franchise\nthat any dispute arising out of or in connection with the\ninterpretation, performance or nonperformance of the parties to the\nfranchise or in any way related to the franchise be determined through\nthe application of any other state's laws.\n (u) To use any subsidiary corporation, affiliated corporation, captive\nfinance source or any other controlled corporation, partnership,\nassociation or person to accomplish what would otherwise be unlawful\nconduct under this article on the part of the franchisor.\n (v) To use a CSI (customer satisfaction index) or other system\nmeasuring a customer's degree of satisfaction with a franchised motor\nvehicle dealer as a sale or service provider unless any such system is\ndesigned and implemented in such a way that it is fair and equitable to\nboth the franchisor and the franchised motor vehicle dealer. In any\ndispute between a franchisor and a franchised motor vehicle dealer the\nparty claiming the benefit of the system as justification for acts in\nrelation to the franchise shall have the burden of demonstrating the\nfairness and equity of the system both in design and implementation in\nrelation to the pending dispute. Upon request of any franchised motor\nvehicle dealer, a franchisor shall disclose in writing to such dealer a\ndescription of how that system is designed and all relevant information\npertaining to such dealer used in the application of that system to such\ndealer.\n (w) To withhold from a franchised motor vehicle dealer a new motor\nvehicle product of the same line make which the franchised motor vehicle\ndealer is authorized to sell under its franchise. Provided that the\nfailure to deliver any motor vehicle shall not be considered to be a\nviolation of this article if such failure is due to an act of God, work\nstoppages or delays due to strikes or labor difficulties, freight\nembargoes, shortages of materials, a lack of manufacturing capacity, or\nother causes over which the franchisor shall have no control. A\nfranchised motor vehicle dealer shall be entitled to sell and service\nall the manufacturer's new motor vehicles which the franchised motor\nvehicle dealer is authorized to sell pursuant to the franchise,\nprovided, however, a franchisor may impose reasonable facility, capital,\ntraining, tools and parts inventory requirements as a condition to the\nfranchised motor vehicle dealer being permitted to sell such new motor\nvehicle products. Conditions imposed by the franchisor shall be\nreasonably applied to all of its franchised motor vehicle dealers.\nFranchised motor vehicle dealers who are presently parties to a\nfranchise with the franchisor shall be offered the right to sell and\nservice any new motor vehicle product of the same line make owned or\ngenerally distributed by such franchisor's franchised motor vehicle\ndealer within such franchised motor vehicle dealer's designated area of\nresponsibility designated in the franchise agreement before any person\nnot a party to such a franchise for the sale of motor vehicles within\nsuch area of responsibility is offered or granted a franchise to sell\nsuch new motor vehicle product from a location within such area of\nresponsibility.\n (x) To require a franchised motor vehicle dealer to agree to a term or\ncondition in a franchise, or as a condition to the offer, grant or\nrenewal of the franchise, lease or agreement, which:\n (1) unless preempted by federal law, requires the franchised motor\nvehicle dealer to waive trial by jury in actions involving the\nfranchisor; or\n (2) unless preempted by federal law, specifies the jurisdiction,\nvenues or tribunals in which disputes arising with respect to the\nfranchise, lease or agreement shall or shall not be submitted for\nresolution or otherwise prohibits a franchised motor vehicle dealer from\nbringing an action in a particular forum otherwise available.\n (y) Subject to the provisions of paragraph (w) of this subdivision, to\nsell or offer to sell or lease or offer to lease a motor vehicle other\nthan to a franchised motor vehicle dealer in this state; provided,\nhowever, that this paragraph shall not apply to sales or leases of new\nmotor vehicles made by a franchisor to its employees, immediate family\nmembers of employees, retirees or immediate family members of retirees\nwhich are hereby authorized notwithstanding the provisions of section\nfour hundred fifteen of this title. Nothing in this paragraph shall\nprohibit a franchisor from utilizing direct marketing designed to\ngenerate leads via mail, phone, or any other medium, provided that leads\ndeveloped thereby are referred to the franchised motor vehicle dealers\nin this state and in proximity to the consumer pursuant to a fair and\nequitable system of allocating such leads or to the franchised motor\nvehicle dealer as specified by the consumer. The provisions of this\nparagraph shall not apply to franchisors of house coaches when the\nfranchisor does not have any franchised house coach dealers in this\nstate.\n (z) To refuse to allocate, sell, or deliver motor vehicles, to charge\nback or withhold payments or other things of value for which the\nfranchisee is otherwise eligible, or to take or threaten to take any\nadverse action against a franchised motor vehicle dealer, in connection\nwith or as a result of any new motor vehicle sold by the franchised\nmotor vehicle dealer and subsequently exported, providing such dealer\ncan demonstrate that he exercised due diligence and that the sale was\nmade in good faith including that the dealer did not know nor reasonably\nshould have known of the purchaser's intention to export the motor\nvehicle. A franchised motor vehicle dealer which causes a new motor\nvehicle to be registered in this state or in a foreign state and causes\nto be collected the appropriate sales and use tax, or that reasonably\nrelied on a franchisor to complete a sale shall be presumed to have\nexercised good faith and due diligence. Prior to taking an adverse\naction, including a charge back, as a result of an export, a franchisor\nshall provide written notice to the franchised motor vehicle dealer of\nthe adverse action, and, if a charge back, the specific amount of the\ncharge back, and the vehicle or vehicles at issue. A dealer shall not be\nliable for the delivery of any vehicle sold through a franchisor's fleet\nprogram for any such delivery in which the sale or lease was not\ninitiated or negotiated by the dealer and its function was to provide\ndelivery on behalf of the franchisor.\n (aa) To: (1) sell directly to a franchised motor vehicle dealer or, to\nor through a franchised motor vehicle dealer in which the franchisor\nowns any interest or controls the management, directly or indirectly,\nmotor vehicles, parts, warranties, or services at a price that is lower\nthan the price which the franchisor charges to all other franchised\nmotor vehicle dealers; or\n (2) sell directly to a consumer at retail new original equipment\nmanufacturer's parts (OEM) at a price that is lower than the price which\nthe franchisor makes available to franchised motor vehicle dealers; or\n (3) otherwise provide a franchised motor vehicle dealer in which the\nfranchisor owns any interest or controls the management, directly or\nindirectly, goods or services at a price that is lower than the price\ncharged to all other franchised motor vehicle dealers.\n (bb) On and after the effective date of this paragraph, to acquire any\ninterest in any additional motor vehicle dealer in this state, with the\nexception of stock in a publicly held dealer when ownership is passive\nand for investment purposes only; provided, however, that nothing in\nthis paragraph shall prohibit a franchisor and its affiliates that own\nan interest in a franchised motor vehicle dealership that operates or is\napproved to operate, within one hundred twenty days after the effective\ndate of this paragraph, from selling or servicing a new line make of the\nfranchisor or its affiliates that was not distributed in this state as\nof the effective date of this paragraph. Provided, further, that nothing\nin this paragraph shall prohibit a franchisor from acquiring any\ninterest in any franchised motor vehicle dealership:\n (1) when operating such franchise for a temporary period, not to\nexceed one year, during the transition from one owner of the motor\nvehicle dealership to another, provided, however, that such temporary\nperiod may be extended once for an additional period not to exceed one\nyear for good cause. Provided that for franchisors of house coaches, the\nperiod of temporary ownership of a franchised house coach dealership may\nbe extended in one year increments for good cause shown, except that the\naggregate of such extensions shall not exceed five years; or\n (2) when operating such franchise temporarily under a plan with an\nindependent individual who is obligated to make a significant investment\nin the dealership that is subject to loss and has an ownership interest\nor expects to acquire full ownership in a reasonable period under\nreasonable terms and conditions, provided that a reasonable period shall\nbe presumed to not exceed eight years; provided, however, that the\nexception provided in this subparagraph shall not apply to any\nfranchisor, manufacturer, distributor, distributor branch or factory\nbranch that holds a certificate or registration pursuant to subparagraph\n(iii) of paragraph f of subdivision seven of section four hundred\nfifteen of this title.\n (cc)(1) To enter into a franchise establishing an additional new motor\nvehicle dealer or relocating an existing new motor vehicle dealer into\nthe relevant market area of an existing franchise motor vehicle dealer\nof the same line make unless the franchisor provides notice pursuant to\nthe terms of this subdivision. All dealers that have a relevant market\narea that encompasses the proposed site shall be entitled to written\nnotice, via certified mail return receipt requested, informing them of\nthe proposed addition or relocation. Any new motor vehicle dealer may\ninstitute an action as provided in section four hundred sixty-nine of\nthis article to protest the establishment or relocation of the new motor\nvehicle dealer following receipt of such notice, or following the end of\nany appeal procedure provided by the franchisor. In any action brought\nby the dealer, the franchisor shall have the burden of proving that\nthere exists good cause for any such addition or relocation. Institution\nof an action pursuant to this subdivision shall serve to stay, without\nbond, the proposed addition or relocation until a final judgment has\nbeen rendered in a proceeding or action as provided in section four\nhundred sixty-nine of this article.\n (2) This subdivision shall not apply to:\n (i) the relocation or replacement, other than a replacement of a\ndealer who has moved within such area, of an existing new motor vehicle\ndealer within that dealer's own existing relevant market area, provided\nthat the relocation not be to a site within the relevant market area of\na licensed new motor vehicle dealer for the same line make of motor\nvehicle, unless such existing franchise was previously located within\nsuch new motor vehicle dealer's relevant market area; or\n (ii) the addition of a new motor vehicle dealer or the establishment\nof a replacement new motor vehicle dealer, other than a replacement of a\ndealer who has moved within such area, at or within two miles of a\nlocation at which a former licensed new motor vehicle dealer for the\nsame line make of new motor vehicle had ceased operating within the\nprevious two years; or\n (iii) the relocation of an existing new motor vehicle dealer within\ntwo miles of the existing site of the new motor vehicle dealership if\nthe franchise has been operating on a regular basis from the existing\nsite for a minimum of three years immediately preceding the relocation;\nor\n (iv) the relocation of a new motor vehicle dealer of the same line\nmake if that dealer or replacement dealer is moving further away from a\nmotor vehicle dealer of of the same line make.\n (3) In determining whether good cause has been established for not\nentering into or relocating an additional new motor vehicle dealer for\nthe same line make, there shall be individual findings with respect to\nthe following:\n (i) the permanency of the investment of both the existing and proposed\nadditional new motor vehicle dealers;\n (ii) growth or decline in population, density of population, and new\ncar registrations in the area;\n (iii) effect on the consuming public in the area;\n (iv) whether it is injurious or beneficial to the public welfare for\nan additional new motor vehicle dealer to be established;\n (v) whether the new motor vehicle dealers of the same line make in\nthat area are providing adequate competition and convenient customer\ncare for the motor vehicles of the same line make including the adequacy\nof motor vehicle sales and service facilities, equipment, supply of\nmotor vehicle parts, and qualified service personnel;\n (vi) whether the establishment of an additional new motor vehicle\ndealer or relocation of an existing new motor vehicle dealer in the\nrelevant market area would increase competition in a manner beneficial\nto the long-term public interest;\n (vii) the effect on the dealer that proposed to relocate; and\n (viii) any other factor which may be deemed material by the finder of\nfact to the unique facts and circumstances presented.\n (dd) To unreasonably prevent or refuse to approve the relocation of a\ndealership to another site within that dealership's relevant market\narea. The dealership must provide prior written notice providing the\naddress of the proposed new location and a site plan of the proposed\nfacility. The franchisor must, within sixty days of receipt of such\ninformation, grant or deny the dealer's relocation request. Failure to\ntimely deny the request shall be deemed consent to the relocation.\n (ee) To fail to reimburse a dealer in full for the actual cost of\nproviding a loaner vehicle to any customer who is having a vehicle\nserviced at the dealership if the provision of such a loaner vehicle is\nrequired by the franchisor. For the purposes of this paragraph, actual\ncost shall not exceed the average cost in the dealer's region for the\nrental of a substantially similar make and model as the vehicle being\nserviced.\n (ff)(1) To modify the franchise of any franchised motor vehicle dealer\nunless the franchisor notifies the franchised motor vehicle dealer, in\nwriting, of its intention to modify the franchise of such dealer at\nleast ninety days before the effective date thereof, stating the\nspecific grounds for such modification.\n (2) For purposes of this paragraph, the term "modify" or\n"modification" means any change or replacement of any franchise if such\nchange or replacement may substantially and adversely affect the new\nmotor vehicle dealer's rights, obligations, investment or return on\ninvestment.\n (3) If any franchised motor vehicle dealer who receives a written\nnotice of modification institutes an action within one hundred twenty\ndays of receipt of such notice as provided in section four hundred\nsixty-nine of this article to have a review of the threatened\nmodification, such action shall serve to stay, without bond, the\nproposed modification until a final judgment has been rendered in an\nadjudicatory proceeding or action as provided in section four hundred\nsixty-nine of this article. A modification is deemed unfair if it is not\nundertaken in good faith; is not undertaken for good cause; or would\nadversely and substantially alter the rights, obligations, investment or\nreturn on investment of the franchised motor vehicle dealer under an\nexisting franchise agreement. In any action brought by the dealer, the\nfranchisor shall have the burden of proving that such modification is\nfair and not prohibited.\n (gg) To use an unreasonable, arbitrary or unfair sales or other\nperformance standard in determining a franchised motor vehicle dealer's\ncompliance with a franchise agreement. Before applying any sales,\nservice or other performance standard to a franchised motor vehicle\ndealer, a franchisor shall communicate the performance standard in\nwriting in a clear and concise manner.\n (hh) To require that a franchised motor vehicle dealer contribute\nmonetarily to any program or promotion without first receiving the\nwritten consent of the franchised motor vehicle dealer to participate in\nsuch program or promotion. For purposes of this paragraph, the written\nconsent specific to the particular program or promotion must be\nexecuted, by means of handwritten, typed or electronic signature, within\nsixty days prior to the start of the particular program or promotion,\nprovided, however, that consent shall not be required to continue\nparticipation in a program or promotion to which the dealer has given\nwritten consent to renewal, and provided further, that the dealer shall\nbe able to terminate such renewal upon reasonable written notice within\nthirty days following the start or renewal of the program or promotion.\n (ii) To allocate new motor vehicles to a franchised motor vehicle\ndealer based on a program that differentiates between vehicle sales by a\nfranchised motor vehicle dealer within a territory or geographic area\nassigned to such dealer and vehicle sales outside of such territory or\ngeographic area.\n (jj) To utilize a discriminatory, unreasonable, arbitrary or unfair\nsystem of allocation of new motor vehicle inventory. A franchisor shall\ncommunicate its system of allocation in writing in a clear and concise\nmanner to all same line-make dealers located in this state.\n (kk) To refuse to disclose to any franchised motor vehicle dealer the\nmanner and mode of distribution of vehicles in the franchised motor\nvehicle dealer's line make within the state, and an explanation of the\nallocation system, including the methodology used, in a clear and\ncomprehensible form.\n 2-a. On and after the effective date of this subdivision, if a\nfranchisor notifies a franchised motor vehicle dealer, in writing, of\nits decision to monitor the continued viability of the dealership, the\nfranchisor shall include in such notice the specific reasons upon which\nthe franchisor's decision is based.\n 2-b. It shall be unlawful for any franchisor to provide financial\ninformation particular to a franchised motor vehicle dealer, including\nbut not limited to, selling prices and sales margins, that has been\ncollected from such franchised motor vehicle dealer to any other\nfranchised motor vehicle dealer including a franchised motor vehicle\ndealer in which the franchisor owns any interest or controls, directly\nor indirectly, the management thereof. Nothing contained in this\nsubdivision shall be deemed to prevent any franchisor from collecting\nand distributing any such financial information in an aggregate manner\nprovided that the information from any motor vehicle dealer has been\ncombined with the information from one or more franchised motor vehicle\ndealers such that the financial information from a particular dealer is\nno longer identifiable to such dealer.\n 3. In any action or proceeding instituted pursuant to the provisions\nof this section, there shall be available to the franchisor all of the\ndefenses provided for under section thirteen-b of title fifteen, United\nStates code, known as the Robinson-Patman Act.\n