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SB 197: "An Act relating to motor vehicle franchises, motor vehicle transactions, motor vehicle dealers, motor vehicle manufacturers, and motor vehicle distributors."

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 AS 45.25.010 is repealed and reenacted to read:                                                          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.