00 SENATE BILL NO. 197 01 "An Act relating to motor vehicle franchises, motor vehicle transactions, motor vehicle 02 dealers, motor vehicle manufacturers, and motor vehicle distributors." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04  * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 LEGISLATIVE FINDINGS. The legislature finds that 07 (1) the distribution and sale of motor vehicles in the state vitally affects the 08 general economy, the public interest, and the public welfare of the state; 09 (2) in the exercise of its police power, to promote the public interest and the 10 public welfare, to prevent the infliction of fraud and other abuses on people in the state, and to 11 protect and preserve the investments and properties of people in the state, it is necessary to 12 regulate motor vehicle manufacturers, distributors, factory representatives, and distributor 13 representatives, and to regulate motor vehicle dealers doing business in the state; and 14 (3) AS 45.25 is remedial. 01  * Sec. 2. AS 45.25.010 is repealed and reenacted to read: 02 Sec. 45.25.010. Applicability. Except to the extent that the application under 03 this section would impair valid contractual agreements in violation of a provision of 04 the Constitution of the State of Alaska or the Constitution of the United States, this 05 chapter applies to franchise agreements between manufacturers and new motor vehicle 06 dealers in the state if the franchise agreement 07 (1) is in existence on the effective date of this Act; 08 (2) is renewed or amended on or after the effective date of this Act; or 09 (3) is entered into on or after the effective date of this Act. 10  * Sec. 3. AS 45.25.110(a) is amended to read: 11 (a) A manufacturer may not terminate a franchise agreement with a new 12 motor vehicle dealer unless 13 (1) the manufacturer has 14 (A) complied with [SATISFIED] the notice requirements of 15 this chapter; 16 (B) shown that there is good cause under AS 45.25.115 for the 17 termination of the franchise agreement; [,] and 18 (C) acted in good faith [, IF THE REASONS UNDERLYING 19 THE GOOD CAUSE CAN BE CORRECTED BY THE NEW MOTOR 20 VEHICLE DEALER, THE NEW MOTOR VEHICLE DEALER HAS 21 FAILED FOR 60 DAYS AFTER DELIVERY OF THE NOTICE REQUIRED 22 BY AS 45.25.120 TO MAKE THE CORRECTIONS; THE 23 CIRCUMSTANCES IDENTIFIED UNDER AS 45.25.120(a)(2) FOR WHICH 24 A 15-DAY NOTICE OF TERMINATION IS REQUIRED DO NOT 25 QUALIFY AS REASONS FOR WHICH CORRECTION IS ALLOWED 26 UNDER THIS PARAGRAPH]; or 27 (2) the new motor vehicle dealer has systematically engaged in fraud 28 against consumers or the manufacturer or in the operation of the new motor vehicle 29 dealership. 30  * Sec. 4. AS 45.25 is amended by adding a new section to read: 31 Sec. 45.25.115. Good cause; burden of proof. (a) Notwithstanding the terms 01 of a franchise agreement or a waiver, and except as otherwise provided in (b) - (e) of 02 this section, good cause exists for termination of a franchise agreement if 03 (1) a new motor vehicle dealer fails to comply with a franchise 04 agreement provision that is reasonable and materially significant to the franchise 05 agreement; and 06 (2) the manufacturer notifies the new motor vehicle dealer of the 07 failure under (1) of this subsection within 180 days after the manufacturer first 08 acquires knowledge of the failure and the new motor vehicle dealer does not correct 09 the failure in a reasonable time after receiving the notice.  10 (b) If the failure of the new motor vehicle dealer under (a) of this section 11 relates to the performance of the new motor vehicle dealer in sales, service, or level of 12 customer satisfaction, the failure does not amount to good cause under AS 45.25.110, 13 unless 14 (1) the manufacturer determined the failure based on methodology 15 supporting reasonable performance standards that the manufacturer 16 (A) determined in accordance with criteria that the 17 manufacturer established for a dealership located in this state and that the 18 manufacturer applied uniformly; and 19 (B) fully disclosed to the new motor vehicle dealer; 20 (2) the manufacturer notified the new motor vehicle dealer in writing 21 of the failure of the new motor vehicle dealer in sales, service, or level of customer 22 satisfaction; 23 (3) after providing the notice under (2) of this subsection, the 24 manufacturer provided the new motor vehicle dealer with 25 (A) specific reasonable performance standards or goals with 26 which the dealer must comply and that took into account the specific 27 challenges arising from location and environmental conditions for a new 28 vehicle dealer in the state; and 29 (B) a suggested timetable or program during a period of not 30 less than 180 days for reaching the standards or goals under (A) of this 31 paragraph; and 01 (4) the new motor vehicle dealer did not substantially comply with the 02 performance standards or goals under (3)(A) of this subsection during the period 03 provided under (3)(B) of this subsection, and the failure substantially to comply was 04 not because of market, economic, or other factors that exist within the new motor 05 vehicle dealer's relevant market area and that are beyond the control of the dealer. 06 (c) Notwithstanding (a) and (b) of this section, if a new motor vehicle dealer 07 claims that the manufacturer has not provided the new motor vehicle dealer with an 08 adequate supply of new motor vehicles, the manufacturer does not have good cause to 09 terminate the franchise agreement under AS 45.25.110, unless 10 (1) the manufacturer provided an adequate supply of new motor 11 vehicles, both in quantity and product mix, for the new motor vehicle dealer's assigned 12 market area, and the manufacturer delivered the supply in a manner that allowed the 13 dealer reasonably to meet the manufacturer's performance standards or goals; and 14 (2) upon request, the manufacturer provides the new motor vehicle 15 dealer with documentation that is sufficient for the new motor vehicle dealer to 16 develop a market analysis; the documentation must include the allocation of new 17 motor vehicles to the new motor vehicle dealer and other new motor vehicle dealers in 18 the same zone during the period established by the manufacturer; the new motor 19 vehicle dealer may not share the market analysis with a person that is not involved in 20 preparing the market analysis or terminating the franchise agreement. 21 (d) Notwithstanding the other provisions of this section, there is good cause to 22 terminate a franchise agreement under AS 45.25.110 if 23 (1) the new motor vehicle dealer is insolvent or is the subject of a 24 bankruptcy or receivership proceeding; 25 (2) the new motor vehicle dealer has failed to conduct its customary 26 sales and service operations during its customary business hours for seven consecutive 27 business days; this paragraph does not apply to a closure because of an act or 28 circumstance beyond the direct control of the new motor vehicle dealer; 29 (3) the new motor vehicle dealer or a principal operator of the 30 dealership is convicted of a felony; or 31 (4) the new motor vehicle dealer has had a license revoked or 01 suspended for more than 30 days, if the new motor vehicle dealer is required to have 02 the license to operate the new motor vehicle dealership. 03 (e) The events described in AS 45.25.300(12) do not constitute good cause for 04 termination. 05 (f) The manufacturer has the burden of proving that good cause exists for 06 termination of a franchise agreement. 07  * Sec. 5. AS 45.25.120(a) is amended to read: 08 (a) Before termination of a franchise agreement, a [A] manufacturer shall 09 give [FURNISH] a notice of termination of the [A] franchise agreement to a new 10 motor vehicle dealer at least 11 (1) 90 days before the effective date of a termination, except as 12 required under (2) or (3) of this subsection; 13 (2) 15 days before the effective date of a termination when the [NEW 14 MOTOR VEHICLE DEALER] 15 (A) new motor vehicle dealer is insolvent or is the subject of a 16 bankruptcy or receivership proceeding; 17 (B) new motor vehicle dealer has failed to conduct its 18 customary sales and service operations during its customary business hours for 19 seven consecutive business days; this subparagraph does not apply to closures 20 due to acts of God or circumstances beyond the direct control of the new motor 21 vehicle dealer; or 22 (C) new motor vehicle dealer or a principal operator of the  23 dealership is convicted of a felony [INVOLVING MORAL TURPITUDE OR 24 FRAUD UNDER THE LAW OF THIS STATE, ANOTHER STATE, THE 25 FEDERAL GOVERNMENT, A TERRITORY OF THE UNITED STATES, 26 OR THE DISTRICT OF COLUMBIA]; or 27 (D) new motor vehicle dealer has had a license revoked or  28 suspended for more than 30 days, if the new motor vehicle dealer is  29 required to have the license to operate the new motor vehicle dealership;  30 or 31 (3) 180 days before the effective date of the termination if the 01 manufacturer or distributor is discontinuing the sale and distribution of the product 02 line on a nationwide basis. 03  * Sec. 6. AS 45.25 is amended by adding a new section to read: 04 Sec. 45.25.135. Termination by dealer. Notwithstanding the terms of a 05 franchise agreement, a new motor vehicle dealer may terminate a franchise agreement 06 by giving written notice of the termination to the manufacturer at least 90 days before 07 the effective date of the termination. 08  * Sec. 7. AS 45.25.140 is repealed and reenacted to read: 09 Sec. 45.25.140. Payment for inventory, equipment, and other items. (a) 10 Upon the termination of a new motor vehicle dealer's franchise agreement, the 11 manufacturer shall pay the new motor vehicle dealer, at a minimum, 12 (1) if the new motor vehicles have not been materially altered or 13 materially damaged and if the new motor vehicles are current or previous year models 14 the dealer acquired from the manufacturer within the past two model years before 15 receipt of the notice of termination, the new motor vehicle dealer's cost of the unsold 16 new motor vehicles, plus any charges by the manufacturer for distribution, delivery, 17 and taxes, and less 18 (A) all allowances paid or credited to the new motor vehicle 19 dealer by the manufacturer; 20 (B) repairable damage, except that the manufacturer is not 21 required to repurchase a damaged motor vehicle if the cost of repairing the 22 damage exceeds five percent of the manufacturer's suggested retail price of the 23 motor vehicle as calculated at the dealer's authorized warranty rate for labor 24 and parts; and 25 (C) a mileage charge of 20 cents a mile for all mileage over 26 200 miles on demonstrator vehicles; 27 (2) the new motor vehicle dealer's cost, including any charges by the 28 manufacturer for distribution, delivery, and taxes, less all allowances that the 29 manufacturer paid or credited to the new motor vehicle dealer, of new motor vehicles 30 required by the manufacturer to be used for loaner, demonstrator, or display purposes; 31 (3) the new motor vehicle dealer's cost for all unused, undamaged, and 01 unsold supplies, parts, and accessories in the original unbroken packaging if 02 (A) the supply, part, or accessory is listed in the manufacturer's 03 current parts catalog; and 04 (B) the new motor vehicle dealer acquired the supply, part, or 05 accessory from the manufacturer or distributor, or the manufacturer required 06 the new motor vehicle dealer to purchase the supply, part, or accessory; 07 (4) the fair market value of each undamaged sign that is owned by the 08 new motor vehicle dealer and that bears a common name, trade name, or trademark of 09 the manufacturer, if the manufacturer recommended or required the new motor vehicle 10 dealer to acquire the sign and the sign is in good and usable condition, less reasonable 11 wear and tear; 12 (5) the fair market value of all equipment, furnishings, and special 13 tools that the new motor vehicle dealer owns or leases, that the new motor vehicle 14 dealer acquired from the manufacturer or from sources approved by the manufacturer, 15 that the manufacturer recommended or required the new motor vehicle dealer to 16 purchase, and that are in good and usable condition, less reasonable wear and tear; 17 however, if the new motor vehicle dealer leases the equipment, furnishings, or tools, 18 the manufacturer shall pay the new motor vehicle dealer the amount of money that is 19 required for the new motor vehicle dealer to terminate the lease under the lease 20 agreement; 21 (6) the fair market value of all computers, printers, and software that 22 the manufacturer required or that were reasonably necessary for the new motor vehicle 23 dealer to operate the dealership according to the standards of the manufacturer, except, 24 if the new motor vehicle dealer leases the computers, printers, or software, the 25 manufacturer shall pay the new motor vehicle dealer the amount of money that is 26 required for the new motor vehicle dealer to terminate the lease under the lease 27 agreement; and 28 (7) the cost to the new motor vehicle dealer to transport, handle, pack, 29 and load the new motor vehicles, supplies, parts, accessories, signs, equipment, 30 furnishings, and special tools described in this subsection. 31 (b) To the extent the franchise agreement requires the manufacturer to pay or 01 reimburse the new motor vehicle dealer more than the amounts required under (a) of 02 this section, the provisions of the franchise agreement control. 03 (c) Within 90 days after the effective date of the termination, the new motor 04 vehicle dealer shall return the property required to be repurchased under (a) of this 05 section to the manufacturer or distributor at the expense of the manufacturer. 06 (d) The manufacturer shall pay the compensation required under (a) of this 07 section within 30 days after the new motor vehicle dealer tenders the property 08 described in (a) of this section to the manufacturer if the new motor vehicle dealer has 09 clear title to the property and is in a position to convey that title to the manufacturer. If 10 the property is subject to a security interest, the manufacturer may jointly pay the new 11 motor vehicle dealer and the holder of the security interest, and the manufacturer may 12 offset those payments. 13  * Sec. 8. AS 45.25.150 is repealed and reenacted to read: 14 Sec. 45.25.150. Payments for dealership facilities and business. (a) In 15 addition to the payment required under AS 45.25.140 and (c) of this section, upon 16 termination of a franchise agreement under this chapter, the manufacturer shall, at the 17 request and option of the new motor vehicle dealer, pay the new motor vehicle dealer 18 (1) the dealer's cost for a relocation, substantial alteration, or 19 remodeling of a dealer's facilities that the manufacturer required for the continuation 20 or renewal of the franchise agreement and that was completed within three years of the 21 termination; 22 (2) if the new motor vehicle dealer is leasing the new motor vehicle 23 dealership facilities from a lessor other than the manufacturer, an amount of money 24 that is equal to the rent for the longer of 25 (A) the unexpired term of a lease or 24 months, whichever 26 period is shorter; or 27 (B) the time provided by the franchise agreement; or 28 (3) if the new motor vehicle dealer owns the dealership facilities, a 29 sum of money that is equivalent to the reasonable rental value of the dealership 30 facilities for 24 months or until the facilities are leased or sold, whichever period is 31 shorter. 01 (b) The payments under (a) of this section are only required to the extent that 02 the new motor vehicle dealer used the facilities for activities under the franchise 03 agreement and only to the extent that the new motor vehicle dealer did not lease the 04 facilities for unrelated purposes. 05 (c) If a manufacturer discontinues the sale and distribution of a new motor 06 vehicle line on a nationwide basis, the manufacturer shall pay the new motor vehicle 07 dealer the fair market value of the franchise as if the dealership were a continuing 08 business. 09 (d) If a manufacturer makes a payment under (a) of this section, the 10 manufacturer is entitled to possess and use the new motor vehicle dealership facility 11 during the period for which the payment is made. 12  * Sec. 9. AS 45.25 is amended by adding a new section to read: 13 Sec. 45.25.155. Application of payment provisions. The provisions of 14 AS 45.25.140 and 45.25.150 do not apply when a manufacturer terminates a franchise 15 agreement because 16 (1) the new motor vehicle dealer is insolvent or is the subject of a 17 bankruptcy or receivership proceeding; 18 (2) the new motor vehicle dealer has failed to conduct its customary 19 sales and service operations during its customary business hours for seven consecutive 20 business days; this paragraph does not apply to closures due to acts or circumstances 21 beyond the direct control of the new motor vehicle dealer; 22 (3) the new motor vehicle dealer or a principal operator of the 23 dealership is convicted of a felony; 24 (4) the new motor vehicle dealer has had a license revoked or 25 suspended for more than 30 days, if the new motor vehicle dealer is required to have 26 the license to operate the new motor vehicle dealership;  27 (5) the new motor vehicle dealer has made a fraudulent 28 misrepresentation to the manufacturer or distributor that is material to the franchise 29 agreement; or 30 (6) the new motor vehicle dealer voluntarily enters into an agreement 31 to sell the stock of the new motor vehicle dealer to another person, and the 01 manufacturer approves the agreement. 02  * Sec. 10. AS 45.25.160 is repealed and reenacted to read: 03 Sec. 45.25.160. Sale, transfer, or exchange of a franchise. (a) 04 Notwithstanding the terms of a franchise agreement, a manufacturer may not withhold 05 consent to the sale, transfer, or exchange of a franchise to a qualified buyer if the 06 qualified buyer 07 (1) meets the normal, reasonable, and uniformly applied standards 08 established by the manufacturer for a person to whom the manufacturer may grant an 09 application to be a new motor vehicle dealer; 10 (2) already holds a franchise from the manufacturer; or 11 (3) is capable of being licensed as a new motor vehicle dealer in the 12 state. 13 (b) If requested by a manufacturer, the applicant for a franchise shall 14 (1) promptly provide the personal and financial information that is 15 reasonably necessary to determine whether the sale, transfer, or exchange should be 16 approved; and 17 (2) agree to be bound by all reasonable terms and conditions of the 18 franchise. 19 (c) If a manufacturer refuses to approve the sale, transfer, or exchange of a 20 franchise, the manufacturer shall serve written notice on the applicant and on the 21 transferring, selling, or exchanging new motor vehicle dealer of its refusal to approve 22 the transfer of the franchise not later than 60 days after the date the manufacturer 23 receives the written request from the new motor vehicle dealer. If the manufacturer 24 has requested personal or financial information from the applicant under (b)(1) of this 25 section, the manufacturer shall serve the notice not later than 60 days after the receipt 26 of the information. Service of a notice under this section shall be made by personal 27 service or certified mail, return receipt requested. 28 (d) A manufacturer's failure to respond in writing to a request for consent to a 29 sale, transfer, or exchange under (a) of this section within 60 days after receipt of a 30 written request on the forms, if any, generally used by the manufacturer containing the 31 information and reasonable promises required by a manufacturer is considered to be 01 the manufacturer's consent to the request. 02 (e) The notice under (c) of this section must state the specific grounds for the 03 refusal to approve the sale, transfer, or exchange of the franchise. 04  * Sec. 11. AS 45.25 is amended by adding a new section to read: 05 Sec. 45.25.165. Mitigation of damages. The provisions of AS 45.25.110 - 06 45.25.160 do not relieve a new motor vehicle dealer of the obligation to mitigate the 07 new motor vehicle dealer's damages upon termination. 08  * Sec. 12. AS 45.25.170 is repealed and reenacted to read: 09 Sec. 45.25.170. Succession. (a) Notwithstanding the terms of a franchise 10 agreement, an owner of a new motor vehicle dealer franchise 11 (1) may appoint a designated successor to succeed to the ownership of 12 the new motor vehicle dealer franchise upon the owner's death or incapacity; or 13 (2) if the owner has owned the franchise for at least five consecutive 14 years, may appoint a person to succeed to the ownership of the new motor vehicle 15 dealer franchise at the current date, a specific future date, or an undetermined future 16 date of the owner's choosing that is before the new motor vehicle dealer's death or 17 incapacity. 18 (b) Notwithstanding the terms of a franchise agreement, a designated 19 successor described under (a) of this section may succeed to the ownership interest of 20 the dealer under the existing franchise if 21 (1) the person is qualified and experienced in the business of being a 22 new motor vehicle dealer and meets the normal, reasonable, and uniformly applied 23 standards of a manufacturer to grant an application to a person for a franchise from the 24 manufacturer or, in the case of a designated successor who is not experienced in the 25 business of being a new motor vehicle dealer, the person will employ an individual 26 who is qualified and experienced in the business of being a new motor vehicle dealer 27 to help manage the day-to-day operations of the new motor vehicle dealership; 28 (2) the designated successor gives written notice to the manufacturer of 29 the intention of the designated successor to succeed to the ownership of the new motor 30 vehicle dealer franchise within 60 days after the former owner's death or incapacity or, 31 if the appointment is under (a)(2) of this section, at least 30 days before the designated 01 successor's proposed succession; and 02 (3) the designated successor agrees to be bound by all terms and 03 conditions of the existing franchise that are in compliance with the law of the state. 04 (c) The manufacturer may request, and the designated successor shall 05 promptly provide, the personal and financial information that is reasonably necessary 06 for the manufacturer to determine whether to accept the designated successor. 07 (d) A manufacturer may refuse to honor the succession to the ownership of a 08 new motor vehicle dealer franchise agreement by a designated successor if the 09 manufacturer establishes that good cause exists for its refusal and if the manufacturer 10 gives written notice to the designated successor and the new motor vehicle dealer of 11 its refusal to accept the designated successor not earlier than 60 days after the date the 12 manufacturer receives the notice from the new motor vehicle dealer. However, if the 13 manufacturer has requested personal or financial information from the applicant under 14 (c) of this section, the manufacturer shall give the notice not later than 30 days after 15 the manufacturer's receipt of the requested personal or financial information. 16 (e) The notice under (d) of this section must state the specific grounds for the 17 refusal to honor the succession. If the manufacturer does not serve the notice of refusal 18 in a timely and proper manner, the designated successor shall be considered approved 19 and continue to be an approved designated successor to the franchise agreement in full 20 force and effect, subject to termination only as otherwise provided under this chapter. 21 (f) A manufacturer has the burden of proof to show that good cause exists for 22 the refusal to honor a succession. 23 (g) This section does not prevent the owner of a new motor vehicle dealer 24 from filing with the manufacturer a written, notarized notice designating a person as 25 the successor. If the notice under this subsection has not been revoked by written 26 notice from the owner to the manufacturer and conflicts with the provisions of this 27 section, the notice given under this subsection governs. 28 (h) If an owner enters into an agreement to sell the franchise to a person who 29 is related to the owner in the first or second degree or is the husband or wife of a 30 person who is related to the owner in the first or second degree, the manufacturer may 31 not exercise a right of first refusal contained in the manufacturer's franchise agreement 01 with the owner. 02 (i) A manufacturer may not require changes in the capitalization or facilities of 03 a franchise as a condition of approving a designated family member successor or a 04 current qualified employee successor, including a general manager of the franchise, to 05 have full managerial authority for the operating management of the franchise. 06  * Sec. 13. AS 45.25.180 is repealed and reenacted to read: 07 Sec. 45.25.180. New or relocated dealership. (a) Before a manufacturer 08 enters into a franchise establishing or relocating a new motor vehicle dealer within a 09 dealer's relevant market area, the manufacturer shall give 90 days' written notice to the 10 new motor vehicle dealer holding the relevant market area of the manufacturer's 11 intention to establish an additional new motor vehicle dealer or to relocate an existing 12 new motor vehicle dealer within the dealer's relevant market area. 13 (b) This section does not apply 14 (1) to the relocation of an existing new motor vehicle dealer to a new 15 location within the relevant market area of the existing new motor vehicle dealer; 16 (2) to the sale or transfer of the ownership or assets of an existing new 17 motor vehicle dealer if the transferee proposes to engage in business representing the 18 same line make of new motor vehicle at the same location or within 10 miles of that 19 location within the existing new motor vehicle dealer's assigned relevant market area; 20 (3) if the proposed new motor vehicle dealer will establish the 21 dealership at or within 10 miles of a location within the relevant market area in which 22 a former new motor vehicle dealer of the same line make of new motor vehicles had 23 ceased operating within the previous 24 months and if the manufacturer had not 24 assigned the location to another new motor vehicle dealer during the period when the 25 former new motor vehicle dealer had stopped operating; 26 (4) if the proposed relocation is two miles or less from the existing 27 location of the relocating new motor vehicle dealer; or 28 (5) if the proposed relocation will be located farther away from all 29 other existing new motor vehicle dealers of the same line make of new motor vehicle 30 than the existing new motor vehicle dealer. 31 (c) Notwithstanding the terms of a franchise agreement and notwithstanding 01 the terms of a waiver, if a manufacturer intends or proposes to establish an additional 02 new motor vehicle dealership or relocate an existing new motor vehicle dealership 03 within or into a relevant market area in which the same make or line of new motor 04 vehicle is represented, the manufacturer shall first establish good cause to establish or 05 relocate a dealership. When determining whether good cause exists for permitting the 06 proposed establishment or relocation of a new motor vehicle dealer of the same line 07 make, the manufacturer shall consider the existing circumstances, including 08 (1) the extent, nature, and permanency of the investment of the 09 existing new motor vehicle dealers of the same line make in the relevant market area 10 and the proposed additional or relocating new motor vehicle dealer, including 11 obligations reasonably incurred by the existing dealer to perform its obligations under 12 its respective franchise; 13 (2) the growth or decline in population and new motor vehicle 14 registrations during the past five years in the relevant market area; 15 (3) the effect on the consuming public in the relevant market area; 16 (4) the effect on the existing new motor vehicle dealers in the relevant 17 market area, including any adverse financial effect on the existing new motor vehicle 18 dealer; 19 (5) the reasonably expected or anticipated motor vehicle market for the 20 relevant market area, including the age of the population, income, education, size class 21 preference, product popularity, retail lease transactions, other demographic factors, 22 and other factors affecting sales to consumers in the relevant market area; 23 (6) whether establishing an additional new motor vehicle dealer would 24 injure or benefit the public welfare; 25 (7) whether the new motor vehicle dealer of the same line make in the 26 relevant market area is providing adequate competition and convenient customer care 27 for the new motor vehicles of the same line make in the relevant market area, 28 including a consideration of the service facilities, the equipment, the supply of vehicle 29 parts, the qualifications of service personnel, and the number of new motor vehicle 30 sales; 31 (8) whether the establishment of an additional new motor vehicle 01 dealer would increase competition and be in the public interest; 02 (9) whether the manufacturer is motivated principally by good faith 03 and economic considerations to establish an additional or new motor vehicle dealer; 04 (10) whether the manufacturer has denied its existing new motor 05 vehicle dealer of the same line make the opportunity for reasonable growth, market 06 expansion, establishment of a satellite location, subagency, or relocation; and 07 (11) whether the existing dealer is substantially and significantly 08 violating the franchise agreement or other agreements with the manufacturer. 09 (d) If a manufacturer intends or proposes to enter into a franchise agreement to 10 establish an additional new motor vehicle dealer within a relevant market area in 11 which the same make or line of new motor vehicle is represented, the manufacturer 12 shall first offer the existing dealer in that relevant market area the opportunity to 13 establish the new dealership as a satellite location of the existing dealer. If the 14 manufacturer believes, in good faith, that the existing new motor vehicle dealer does 15 not, for good cause, qualify to establish the additional dealership or satellite location, 16 or relocate an existing new motor vehicle dealer within or into a relevant market area 17 in which the same line make of motor vehicle is then represented, the manufacturer 18 shall provide at least 90 days' advance written notice to each new motor vehicle dealer 19 of the same line make in the relevant market area of the manufacturer's intention to 20 establish an additional new motor vehicle dealer within the relevant market area. The 21 notice shall be sent by certified mail and must include the 22 (1) specific location at which the additional or relocated new motor 23 vehicle dealer will be established; 24 (2) date on or after which the additional or relocated new motor 25 vehicle dealer intends to begin business at the proposed location; 26 (3) identity of the new motor vehicle dealer who is franchised to sell 27 the same line make new motor vehicles as the proposed dealer and who has licensed 28 locations within the relevant market area; 29 (4) names and addresses, if available, of the owners of and principal 30 investors in the proposed additional or relocated new motor vehicle dealership; and 31 (5) specific grounds or reasons for the proposed establishment of an 01 additional new motor vehicle dealer or relocation of an existing new motor vehicle 02 dealer. 03 (e) The manufacturer has the burden of proof to establish that good cause 04 exists for permitting a proposed establishment or relocation of a new motor vehicle 05 dealer under this section. 06  * Sec. 14. AS 45.25 is amended by adding a new section to read: 07 Sec. 45.25.185. Court actions. (a) Within 30 days after receiving the notice of 08 termination given under AS 45.25.120 or within 30 days after the end of an appeal 09 procedure provided by the manufacturer, whichever event is later, a new motor vehicle 10 dealer may bring an action for declaratory judgment in the superior court to determine 11 whether good cause exists under AS 45.25.115 for the termination of the franchise 12 agreement. If a new motor vehicle dealer files an action under this subsection, the 13 manufacturer may not terminate the franchise agreement until the superior court has 14 issued a decision on the matter. 15 (b) Within 20 days after receipt of a notice under AS 45.25.160(c) of a 16 manufacturer's refusal to approve a sale, transfer, or exchange of a franchise by a new 17 motor vehicle dealer, the new motor vehicle dealer may file an action in the superior 18 court to determine whether the manufacturer unreasonably withheld consent to the 19 sale, transfer, or exchange of the franchise. 20 (c) Within 30 days after receipt of a notice of disapproval of succession under 21 AS 45.25.170(d), the proposed successor may file an action with the superior court to 22 determine whether the manufacturer has unreasonably withheld approval. 23 (d) Within 30 days after receiving the notice required under AS 45.25.180(d), 24 or within 30 days after the end of an appeal procedure provided by the manufacturer, 25 whichever is longer, a new motor vehicle dealer may bring an action for declaratory 26 judgment in the superior court to determine whether good cause exists for the 27 establishment or relocation of a proposed new motor vehicle dealer. If a new motor 28 vehicle dealer files an action under this subsection, the manufacturer may not establish 29 or relocate the proposed new motor vehicle dealer until the superior court decides the 30 matter. 31 (e) When a superior court determines whether good cause exists for permitting 01 the proposed establishment or relocation of a new motor vehicle dealer of the same 02 line make under (d) of this section, 03 (1) the superior court shall consider the existing circumstances, 04 including the factors in AS 45.25.180(c), and shall give equal weight to the factors 05 applied under AS 45.25.180(c); and 06 (2) a finding of good cause requires that at least nine of the 11 factors 07 in AS 45.25.180(c) support the proposed establishment or relocation of a new motor 08 vehicle dealer. 09  * Sec. 15. AS 45.25 is amended by adding new sections to article 2 to read: 10 Sec. 45.25.195. Rates for warranty and policy work. (a) A manufacturer 11 shall provide each of its new motor vehicle dealers with the schedule of compensation 12 that the manufacturer shall pay to the new motor vehicle dealer for warranty work, 13 policy work, predelivery service, or other service that the manufacturer requires the 14 new motor vehicle dealer to perform for the manufacturer's products. 15 (b) The manufacturer shall provide the schedule of compensation established 16 under (a) of this section in the franchise agreement or in a separate agreement with the 17 new motor vehicle dealer. The schedule of compensation must include compensation 18 for parts, labor, and diagnostic work and must comply with this section. 19 (c) The schedule of compensation may not be less than the rates that the new 20 motor vehicle dealer charges retail customers for similar service for nonwarranty 21 service and repairs. 22 (d) The manufacturer shall establish the schedule of compensation for parts at 23 a rate that equals the prices that a new motor vehicle dealer charges retail customers 24 for nonwarranty service and repairs for parts, including the price paid for the part, 25 shipping charges, other charges incurred for the parts, and the average retail 26 percentage markup that the new motor vehicle dealer charges. 27 (e) To establish the average retail percentage markup, the new motor vehicle 28 dealer shall submit to the manufacturer 50 sequential chronologically issued retail 29 service repair orders paid by customers, or 45 days of retail service repair orders paid 30 by customers if the number of orders during the 45 days is fewer. The orders that the 31 new motor vehicle dealer submits must cover retail repairs that the new motor vehicle 01 dealer made less than 180 days before the new motor vehicle dealer submits them to 02 the manufacturer. 03 (f) A manufacturer may not require a new motor vehicle dealer to establish the 04 average retail percentage markup for parts by a method other than the method required 05 by (e) of this section. When establishing the average retail percentage markup, a 06 manufacturer may not require the new motor vehicle dealer to provide information 07 that is unduly burdensome or time consuming to provide, including part-by-part or 08 transaction-by-transaction calculations. 09 (g) When calculating the retail rate for parts and labor, the following shall be 10 included in the calculation: 11 (1) repairs for manufacturer special events, manufacturer specials, or 12 retail customer repair promotional discounts; 13 (2) for insurance repairs, parts sold at wholesale or at reduced or 14 specially negotiated rates; 15 (3) routine maintenance not covered under warranty, including the 16 replacement of fluids, filters, and belts, unless the new motor vehicle dealer provides 17 the routine maintenance in the course of making a repair; 18 (4) nuts, bolts, fasteners, and similar items that do not have an 19 individual part number; 20 (5) tires, batteries, and light bulbs; and 21 (6) vehicle reconditioning. 22 (h) The average retail percentage markup calculated under (d) - (g) of this 23 section may not take effect more than 30 days after the new motor vehicle dealer 24 submits the information required in (e) of this section to the manufacturer. 25 (i) A manufacturer shall compensate a new motor vehicle dealer for labor and 26 diagnostic work at the hourly rates charged by the new motor vehicle dealer to its 27 retail customers for that type of work, plus any documentation work or contact time 28 that the new motor vehicle dealer spends and the manufacturer requires to authorize or 29 verify the work, including providing photographs, paperwork, consultation, and 30 electronic data. 31 (j) A manufacturer may disapprove a rate proposed by the new motor vehicle 01 dealer under this section if the manufacturer demonstrates that the hourly rates or other 02 charges under this section unreasonably exceed the rates and charges of all other 03 franchised new motor vehicle dealers in the same relevant market area offering the 04 same motor vehicle line or a competitive motor vehicle line. 05 (k) A new motor vehicle dealer may not receive more than one rate increase 06 under (d) - (g) of this section in a calendar year. 07 (l) A manufacturer shall pay a new motor vehicle dealer for all repairs 08 performed by a new motor vehicle dealer that are covered under a manufacturer's 09 warranty, policy, or service contract. The manufacturer shall pay for the repairs 10 whether the owner or the dealership personnel identified the need for the repair. A 11 manufacturer shall pay the dealer for the repairs in accordance with the new motor 12 vehicle dealer's schedule of compensation established under (d) - (g) of this section 13 that applies to the repairs when the new motor vehicle dealer made the repairs.  14 (m) A new motor vehicle dealer shall submit a claim for warranty work, 15 policy work, or predelivery service to the manufacturer within 90 days after the owner 16 reclaims the motor vehicle following the new motor vehicle dealer's completion of 17 work on the motor vehicle. The new motor vehicle dealer shall submit the claim in the 18 manner that the manufacturer requires. 19 (n) Within 15 days after the manufacturer receives a claim from a new motor 20 vehicle dealer under (m) of this section, the manufacturer shall approve or deny the 21 claim. If a manufacturer does not disapprove a claim in writing or electronically, as 22 required by this subsection, the manufacturer is considered to have approved the 23 claim, and the manufacturer shall pay the claim within 30 days after the manufacturer 24 receives the claim. 25 (o) If a manufacturer disapproves a claim that the new motor vehicle dealer 26 submits under (m) of this section, a manufacturer shall notify the new motor vehicle 27 dealer in writing or electronically and shall set out the reasons for disapproving the 28 claim. A new motor vehicle dealer may correct and resubmit the claim within 30 days 29 after the new motor vehicle dealer receives the written or electronic notice that the 30 manufacturer disapproved or denied the claim.  31 (p) Notwithstanding the other provisions of this section, within 15 days after a 01 manufacturer receives a consumer or dealer incentive claim from a new motor vehicle 02 dealer, the manufacturer shall approve or deny the claim. If a manufacturer does not 03 deny a claim in writing or electronically, as required by this subsection, within 15 days 04 after the manufacturer receives the claim, the manufacturer is considered to have 05 approved the claim, and the manufacturer shall pay the claim within 30 days after the 06 manufacturer receives the claim. 07 (q) The manufacturer shall notify the new motor vehicle dealer in writing or 08 electronically if the manufacturer denies the claim that the new motor vehicle dealer 09 submits under (p) of this section, and shall set out the reasons for the denial. A new 10 motor vehicle dealer may correct and resubmit the claim within 30 days after the new 11 motor vehicle dealer receives the written or electronic notice that the manufacturer 12 disapproved the claim. 13 (r) A manufacturer may not initiate or conduct an audit to determine the 14 validity of paid claims for new motor vehicle dealer warranty work, policy work, 15 predelivery service claims, or other service claims, or for consumer or new motor 16 vehicle dealer incentive claims, unless the manufacturer initiates the audit within the 17 six months following payment of the claim. The manufacturer may not perform more 18 than one audit in a calendar year.  19 (s) A manufacturer may not deny or charge back to a new motor vehicle dealer 20 a warranty or policy claim after the initial submission or resubmission of the claim, or 21 as a result of an audit, if the new motor vehicle dealer can reasonably demonstrate that 22 the reason for the repair existed, the repair was performed, and the cause for the repair 23 was cured. 24 (t) A manufacturer may not recover all or a portion of its costs for 25 compensating its dealers for parts and labor provided by a new motor vehicle dealer 26 under this section by using offsets against amounts owed to the new motor vehicle 27 dealer or by making a separate charge, surcharge, or other imposition.  28 (u) If a manufacturer requires that a certified technician perform a repair on a 29 motor vehicle, and if a certified technician is not available to begin the repair within 30 one business day after the delivery of the motor vehicle to a new motor vehicle dealer, 31 an uncertified technician may perform the repair if the uncertified technician performs 01 the repair under the supervision of a certified technician or service manager, and the 02 manufacturer shall pay a new motor vehicle dealer for the repairs performed by the 03 uncertified technician at the rate charged by the new motor vehicle dealer for the same 04 repair when performed by a certified technician. 05 (v) If a motor vehicle needs repairs that are covered under a manufacturer's 06 warranty, policy, or service contract, and if the motor vehicle is in a location that is not 07 accessible by road or that is more than 100 road miles from a new motor vehicle 08 dealer who may perform warranty, policy, or service contract repairs on the motor 09 vehicle, a new motor vehicle dealer may arrange to have the repairs performed by 10 another technician where the vehicle is located. The manufacturer shall reimburse the 11 new motor vehicle dealer for the cost of having the repairs performed in accordance 12 with the authorizing new motor vehicle dealer's then current schedule of compensation 13 for parts and labor, plus any freight or shipping charges, or at the retail rate that is in 14 effect when, and in the community where, the repairs are made, whichever amount is 15 less. 16 (w) In this section, 17 (1) "average retail percentage markup" means the average retail 18 percentage markup established under (e) of this section; 19 (2) "schedule of compensation" means the schedule of compensation 20 provided under (a) of this section. 21 Sec. 45.25.200. Discontinuation or reduction of line. In this chapter, if a 22 manufacturer discontinues the sale and distribution of a new motor vehicle line, or if a 23 manufacturer materially reduces the selection of new motor vehicle lines that the 24 manufacturer is offering to the extent that it is not economically viable for a new 25 motor vehicle dealer to continue to retail the new motor vehicle line, the new motor 26 vehicle dealer may consider the discontinuation or reduction a termination of the 27 franchise agreement between the manufacturer and the new motor vehicle dealer. 28  * Sec. 16. AS 45.25.300 is repealed and reenacted to read: 29 Sec. 45.25.300. Unfair practices. (a) Notwithstanding the terms of a franchise 30 agreement, a manufacturer may not 31 (1) sell, offer to sell, or deliver a new motor vehicle to a new motor 01 vehicle dealer at a lower actual price than the actual price offered to another new 02 motor vehicle dealer for the same model of new motor vehicle that is similarly 03 equipped; 04 (2) sell, offer to sell, or deliver parts, accessories, equipment, or other 05 items to a new motor vehicle dealer at a lower actual price than the actual price 06 offered to another new motor vehicle dealer; 07 (3) use a promotion plan, marketing plan, or other similar device that 08 would 09 (A) result in one new motor vehicle dealer being charged a 10 lower actual price on new motor vehicles, parts, accessories, or other items 11 than another new motor vehicle dealer; or 12 (B) provide a rebate or incentive program that is based on a 13 new motor vehicle dealer purchasing, selling, or including in inventory a 14 predetermined number or percentage of new motor vehicles, certified pre- 15 owned motor vehicles, or lease return motor vehicles; 16 (4) adopt or change a method for the allocation, scheduling, or delivery 17 of new motor vehicles, parts, or accessories to a new motor vehicle dealer if the new 18 or changed method is not fair, reasonable, and equitable; upon request of a new motor 19 vehicle dealer, a manufacturer, distributor, factory branch, or factory representative 20 shall disclose in writing to the dealer the method by which the manufacturer allocates, 21 schedules, or delivers new motor vehicles, parts, and accessories to the manufacturer's 22 new motor vehicle dealers handling the same line make of vehicles; 23 (5) prevent, offset, or otherwise impair a new motor vehicle dealer's 24 right to request a documentation service fee on purchases made under an affinity 25 program or a similar program, including a promotion plan, marketing plan, 26 manufacturer employee program, new motor vehicle dealer employee program, or 27 employee friends or family purchase program; in this paragraph, 28 (A) "affinity program" means a marketing program designed to 29 increase brand loyalty by developing an ongoing relationship between a new 30 motor vehicle dealer and the customers of the new motor vehicle dealer; 31 (B) "documentation service fee" means a fee for filling out and 01 filing paperwork in connection with the sale of a new motor vehicle; 02 (6) refuse or fail to deliver, in reasonable quantities and within a 03 reasonable period after receipt of an order, to a new motor vehicle dealer holding a 04 franchise for a make or line of new motor vehicles sold or distributed by the 05 manufacturer, distributor, factory branch, or factory representative a new motor 06 vehicle, part, or accessory, if the vehicle, part, or accessory is being delivered to other 07 motor vehicle dealers, or require a dealer to purchase unreasonable advertising 08 displays or other materials, or unreasonably require a dealer to remodel or renovate 09 existing facilities as a prerequisite to receiving a model or series of vehicles; 10 (7) fail or refuse to offer to its new motor vehicle dealer franchised to 11 sell the same line make of new motor vehicles all models manufactured for that line 12 make of new motor vehicles; 13 (8) sell, lease, ship, or deliver a new motor vehicle to a person in this 14 state, except directly to a new motor vehicle dealer holding a franchise agreement for 15 the line make in this state, without a written and revocable agreement by the new 16 motor vehicle dealer holding the relevant market area for the new motor vehicle dealer 17 to deliver the new motor vehicle to a specific person at a specific location; however, it 18 is not a violation of this paragraph for 19 (A) a manufacturer to sell, lease, or deliver new motor vehicles 20 directly to an agency of the federal government; or 21 (B) a manufacturer or new motor vehicle dealer to arrange for 22 the delivery of a new motor vehicle that is sold or leased to a specific customer 23 of another new motor vehicle dealer that is assigned to the relevant market area 24 in which the purchaser or lessor resides, if the manufacturer or new motor 25 vehicle dealer arranges for the delivery by using an agreement with the new 26 motor vehicle dealer that is assigned to the relevant market area in which the 27 purchaser or lessor resides; 28 (9) own, operate, or control, whether directly or indirectly, a new 29 motor vehicle dealership in this state, except that a manufacturer may own or operate a 30 dealership 31 (A) for a temporary period, not to exceed two years, during the 01 transition from one owner of the dealership to another owner if a franchised 02 new motor vehicle dealer previously owned the dealership and the dealership is 03 currently for sale at a fair and reasonable price to a qualified person who is 04 independent of the manufacturer, distributor, factory branch, or factory 05 representative; or 06 (B) in conjunction with another person in a bona fide business 07 relationship for the purpose of broadening the diversity of its dealers and 08 increasing the opportunities for qualified persons who lack the resources to 09 purchase a dealership completely and immediately if the person 10 (i) is not connected by business arrangement to the 11 manufacturer, distributor, factory branch, or factory representative; 12 (ii) makes a significant bona fide capital investment in 13 the dealership that the person may lose; 14 (iii) has an ownership interest in the dealership; and 15 (iv) operates the dealership under a bona fide written 16 agreement with the manufacturer, distributor, factory branch, or factory 17 representative under which the person will acquire all of the ownership 18 interest in the dealership within a reasonable period and under 19 reasonable terms and conditions; the manufacturer, distributor, factory 20 branch, or factory representative has the burden of proof to establish 21 that the person acquired the dealership within a reasonable period and 22 under reasonable terms and conditions; this sub-subparagraph does not 23 relieve a manufacturer, distributor, factory branch, or factory 24 representative from complying with the other provisions of this 25 paragraph; 26 (10) without the express, continuing, and revocable written consent of 27 the dealer within the relevant market area, own, operate, or control, whether directly or 28 indirectly, a service facility in this state for the repair or maintenance of motor 29 vehicles under the manufacturer's new vehicle warranty, service plans, or extended 30 warranty, or contract with a person other than its franchised new motor vehicle dealer 31 in the relevant market area for payment by the manufacturer to a person for the repair, 01 maintenance, or service of motor vehicles under the manufacturer's new vehicle 02 warranty, extended warranty, or service contract; this paragraph does not prohibit a 03 manufacturer, distributor, factory branch, or factory representative from owning or 04 operating a service facility for the purpose of providing or performing maintenance, 05 repair, or service work on motor vehicles that are owned and operated solely by the 06 manufacturer, distributor, factory branch, or factory representative; 07 (11) use confidential or proprietary information obtained from a new 08 motor vehicle dealer to compete with the new motor vehicle dealer or to sell the 09 confidential or proprietary information to another person; in this paragraph, 10 "confidential or proprietary information" includes trade secrets, business plans, 11 marketing plans, marketing strategies, customer lists, contracts, sales data, revenue, or 12 other business information; 13 (12) terminate a franchise with a new motor vehicle dealer if 14 (A) the new motor vehicle dealer owns, has an investment in, 15 participates in the management of, or holds a franchise agreement for the sale 16 or service of another make or line of new motor vehicles; 17 (B) the new motor vehicle dealer has established another make 18 or line of new motor vehicles or service in the same dealership facilities as 19 those of the manufacturer or distributor; 20 (C) the new motor vehicle dealer has or intends to relocate the 21 manufacturer's or distributor's make or line of new motor vehicles or service to 22 an existing dealership facility that is within the relevant market area of the 23 motor vehicle line make to be relocated, except that, in a nonemergency 24 circumstance, the dealer shall give the manufacturer or distributor at least 60 25 days' notice of the intent to relocate; or 26 (D) a new motor vehicle dealer fails to change the location of 27 the dealership or to make substantial alterations to the use or number of 28 franchises on the dealership premises or facilities; 29 (13) coerce or attempt to coerce a new motor vehicle dealer to refrain 30 from or prohibit or attempt to prohibit a new motor vehicle dealer from acquiring, 31 owning, having an investment in, participating in the management of, or holding a 01 franchise agreement for the sale or service of another make or line of new motor 02 vehicles or related products, or establishing another make or line of new motor 03 vehicles or service in the same dealership facilities; 04 (14) require, by contract or otherwise, a new motor vehicle dealer to 05 make a material alteration to, expansion of, or addition to a dealership facility, unless 06 the manufacturer uniformly requires similarly situated new motor vehicle dealers of 07 the same motor vehicle line make to make the alteration, expansion, or addition and 08 the alteration, expansion, or addition is reasonable in light of all existing 09 circumstances, including economic conditions and local market considerations; if an 10 alteration, expansion, or addition is required under this paragraph, the new motor 11 vehicle dealer may select the person to make the alteration, expansion, or addition; 12 (15) require a new motor vehicle dealer to order or accept delivery of a 13 new motor vehicle, part, accessory, piece of equipment, promotional material, display 14 device, display decoration, or other item that is not otherwise required by law and that 15 the dealer does not voluntarily order; this paragraph does not apply to the recall of 16 safety and emissions campaign parts unless the dealer voluntarily ordered them, or to a 17 motor vehicle feature, part, accessory, or other component required by federal law, the 18 law of this state, or local law; 19 (16) coerce or attempt to coerce a new motor vehicle dealer to join, 20 contribute money to, or affiliate with an advertising association, or to participate 21 monetarily in an advertising campaign, or, if a new motor vehicle dealer chooses to 22 join, contribute monetarily to, or affiliate with an advertising association, to require 23 the new motor vehicle dealer to use the association funding allocated to the new motor 24 vehicle dealer to run prepackaged radio, television, or newspaper advertising that 25 identifies the association as the advertiser rather than the contributing new motor 26 vehicle dealer; 27 (17) prevent or attempt to prevent by contract or another method a new 28 motor vehicle dealer from changing the executive management of the new motor 29 vehicle dealer unless the manufacturer meets the burden of proof to show that a 30 proposed change of executive management will result in executive management by a 31 person who does not have good moral character or who does not meet reasonable, 01 preexisting, and equitably applied standards of the manufacturer; if a manufacturer 02 rejects a proposed change in the executive management, the manufacturer shall give 03 written notice of its reasons for the rejection to the new motor vehicle dealer within 60 04 days after receiving written notice from the new motor vehicle dealer of the proposed 05 change and all related information reasonably requested by the manufacturer; if the 06 manufacturer does not give the written notice within the 60 days, the manufacturer is 07 considered to have approved the change in executive management; 08 (18) condition the sale, transfer, relocation, or renewal of a franchise 09 agreement, or condition manufacturer sales, services, or parts incentives on the 10 (A) manufacturer obtaining site control, including a right to 11 purchase or lease the new motor vehicle dealer's facility; or 12 (B) new motor vehicle dealer making facility improvements or 13 renovations that exceed a gross cost of $5,000 to the new motor vehicle dealer; 14 (19) coerce, threaten, intimidate, or require a new motor vehicle dealer, 15 as a condition of granting or renewing a franchise agreement, to waive, limit, or 16 disclaim a right that the new motor vehicle dealer may have to protest the 17 establishment or relocation of another motor vehicle dealer in the relevant market 18 area; 19 (20) require a new motor vehicle dealer to change the capital structure 20 of the dealership or the means by or through which the new motor vehicle dealer 21 finances the operation of the dealership, unless the dealership does not at all times 22 meet reasonable capital investment requirements; 23 (21) increase the price of a new motor vehicle that the new motor 24 vehicle dealer has ordered from the manufacturer and for which there exists at the time 25 of the order a bona fide sale to a retail or fleet purchaser if the order was made before 26 the manufacturer provided the dealer with an official written price increase 27 notification; 28 (22) deliver to a new motor vehicle dealer a new motor vehicle that 29 does not comply in every respect with equipment requirements required by the law of 30 this state, unless the manufacturer reimburses a dealer to modify the new vehicle to 31 meet the equipment requirements; or 01 (23) fail to indemnify and hold harmless a new motor vehicle dealer 02 (A) from a court judgment for damages, or settlement of a court 03 action if the manufacturer approves the settlement in writing; or 04 (B) where applicable law or the franchise agreement requires 05 the indemnification and holding harmless. 06 (b) The provisions of (a)(1) - (3) of this section do not apply to sales to a new 07 motor vehicle dealer if the new motor vehicle dealer 08 (1) makes the sale for resale to a federal agency; 09 (2) sells or donates the vehicles for use in a driver's education 10 program; 11 (3) makes the sale under a manufacturer's bona fide uniformly applied 12 promotional program offering sales incentives or rebates; 13 (4) sells parts or accessories under a manufacturer's bona fide quantity 14 discount program; or 15 (5) makes the sale under a manufacturer's bona fide motor vehicle 16 discount program to a person that owns and operates a fleet of 15 or more new motor 17 vehicles purchased or leased from a dealer where the manufacturer has assigned an 18 identifier code. 19 (c) In this section, 20 (1) "control" means to possess 21 (A) title to, or right to exercise 10 percent or more of the voting 22 equity interest in a person, whether directly or indirectly through a fiduciary, 23 agent, or other intermediary; or 24 (B) directly or indirectly, the power to direct or cause the 25 direction of the management or policies of a person, whether through the 26 ownership of voting securities, through director control, by contract, or 27 otherwise, except as expressly provided under the franchise agreement; 28 (2) "lease return vehicle" means a motor vehicle that has been 29 previously leased and then returned to the lessor; 30 (3) "operate" means to manage a new motor vehicle dealership directly 31 or indirectly; 01 (4) "own" means to hold the beneficial ownership of one percent or 02 more of a class of equity interest in a new motor vehicle dealership, whether the 03 interest is that of a shareholder, partner, limited liability company member, or 04 otherwise; in this paragraph, "hold" means to have possession of, title to, or control of, 05 whether directly or indirectly through a fiduciary, agent, or other intermediary. 06  * Sec. 17. AS 45.25.990(19) is repealed and reenacted to read: 07 (19) "terminate" includes to cancel, not to renew, or to discontinue or 08 make a reduction under AS 45.25.200; 09  * Sec. 18. AS 45.25.990 is amended by adding new paragraphs to read: 10 (22) "line make" means motor vehicles that are offered for sale under a 11 common name, trademark, service mark, or brand name of the manufacturer of those 12 motor vehicles; 13 (23) "relevant market area" means the area of responsibility of a new 14 motor vehicle dealer established in a franchise agreement. 15  * Sec. 19. AS 45.25.110(b) and 45.25.110(c) are repealed. 16  * Sec. 20. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 TRANSITION: SCHEDULE OF COMPENSATION. The schedule of compensation 19 for a new motor vehicle dealer under franchise with a manufacturer on the effective date of 20 this Act may not be less than the schedule of compensation provided to the new motor vehicle 21 dealer immediately before the effective date of this Act. In this section, 22 (1) "franchise" has the meaning given in AS 45.25.990; 23 (2) "manufacturer" has the meaning given in AS 45.25.990; 24 (3) "new motor vehicle dealer" has the meaning given in AS 45.25.990; 25 (4) "schedule of compensation" has the meaning given in AS 45.25.195.