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HB 136: "An Act relating to motor vehicle franchises, motor vehicle transactions, motor vehicle dealers, motor vehicle manufacturers, and motor vehicle distributors."

00                             HOUSE BILL NO. 136                                                                          
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, manufacturer representatives, and                                   
13 distributor representatives, and to regulate motor vehicle dealers doing business in the state;                         
14 and                                                                                                                     
01            (3)  AS 45.25 is remedial.                                                                                   
02    * Sec. 2. AS 45.25.110(a) is amended to read:                                                                      
03            (a)  A manufacturer may not terminate a franchise agreement with a new                                   
04       motor vehicle dealer unless                                                                                       
05                 (1)  the manufacturer has                                                                               
06                      (A)  complied with [SATISFIED] the notice requirements of                                      
07            this chapter;                                                                                                
08                      (B)  shown that there is good cause under AS 45.25.115 for the                                 
09            termination of the franchise agreement; [,] and                                                          
10 (C)  acted in good faith [, IF THE REASONS UNDERLYING                                                               
11 THE GOOD CAUSE CAN BE CORRECTED BY THE NEW MOTOR                                                                        
12 VEHICLE DEALER, THE NEW MOTOR VEHICLE DEALER HAS                                                                        
13 FAILED FOR 60 DAYS AFTER DELIVERY OF THE NOTICE REQUIRED                                                                
14 BY AS 45.25.120 TO MAKE THE CORRECTIONS; THE                                                                            
15 CIRCUMSTANCES IDENTIFIED UNDER AS 45.25.120(a)(2) FOR WHICH                                                             
16 A 15-DAY NOTICE OF TERMINATION IS REQUIRED DO NOT                                                                       
17 QUALIFY AS REASONS FOR WHICH CORRECTION IS ALLOWED                                                                      
18            UNDER THIS PARAGRAPH]; or                                                                                    
19 (2)  the new motor vehicle dealer has systematically engaged in fraud                                                   
20 against consumers or the manufacturer or in the operation of the new motor vehicle                                      
21       dealership.                                                                                                       
22    * Sec. 3. AS 45.25.110 is amended by adding a new subsection to read:                                              
23 (d)  Notwithstanding the terms of a franchise agreement, a manufacturer may                                             
24 not terminate a franchise with a new motor vehicle dealer because the new motor                                         
25       vehicle dealer                                                                                                    
26 (1)  owns, has an investment in, participates in the management of, or                                                  
27 holds a franchise agreement for the sale or service of another line or make of new                                      
28       motor vehicles;                                                                                                   
29 (2)  has established another line or make of new motor vehicles or                                                      
30       service in the same dealership facilities as those of the manufacturer or distributor;                            
31 (3)  has or intends to relocate the manufacturer's or distributor's line or                                             
01 make of new motor vehicles or service to an existing dealership facility that is within                                 
02 the relevant market area of the motor vehicle line or make to be relocated, except that,                                
03 in a nonemergency circumstance, the dealer shall give the manufacturer or distributor                                   
04       at least 60 days' notice of the intent to relocate; or                                                            
05                 (4)  fails to change the location of the dealership or to make substantial                              
06       alterations to the use or number of franchises on the dealership premises or facilities.                          
07    * Sec. 4. AS 45.25 is amended by adding a new section to read:                                                     
08            Sec. 45.25.115. Good cause; burden of proof. (a) Notwithstanding the terms                               
09       of a franchise agreement or a waiver, and except as otherwise provided in (b) - (d) of                            
10       this section, good cause exists for termination of a franchise agreement if                                       
11 (1)  a new motor vehicle dealer fails to comply with a franchise                                                        
12 agreement provision that is reasonable and materially significant to the franchise                                      
13       agreement; and                                                                                                    
14 (2)  the manufacturer notifies the new motor vehicle dealer of the                                                      
15 failure under (1) of this subsection within 180 days after the manufacturer first                                       
16 acquires knowledge of the failure and the new motor vehicle dealer does not correct                                     
17       the failure in a reasonable time after receiving the notice.                                                    
18 (b)  If the failure of the new motor vehicle dealer under (a) of this section                                           
19 relates to the performance of the new motor vehicle dealer in sales, service, or level of                               
20 customer satisfaction, the failure does not amount to good cause under AS 45.25.110,                                    
21       unless                                                                                                            
22 (1)  the manufacturer determined the failure based on methodology                                                       
23       supporting reasonable performance standards that the manufacturer                                                 
24 (A)  determined in accordance with criteria that the                                                                    
25 manufacturer established for a dealership located in this state and that the                                            
26            manufacturer applied uniformly; and                                                                          
27                      (B)  fully disclosed to the new motor vehicle dealer;                                              
28 (2)  the manufacturer notified the new motor vehicle dealer in writing                                                  
29 of the failure of the new motor vehicle dealer in sales, service, or level of customer                                  
30       satisfaction;                                                                                                     
31 (3)  after providing the notice under (2) of this subsection, the                                                       
01       manufacturer provided the new motor vehicle dealer with                                                           
02 (A)  specific reasonable performance standards or goals with                                                            
03 which the dealer must comply and that took into account the specific                                                    
04 challenges arising from location and environmental conditions for a new                                                 
05            vehicle dealer in the state; and                                                                             
06                      (B)  a suggested timetable or program during a period of not                                       
07            less than 180 days for reaching the standards or goals under (A) of this                                     
08            paragraph; and                                                                                               
09                 (4)  the new motor vehicle dealer did not substantially comply with the                                 
10 performance standards or goals under (3)(A) of this subsection during the period                                        
11 provided under (3)(B) of this subsection, and the failure substantially to comply was                                   
12 not because of market, economic, or other factors that exist within the new motor                                       
13       vehicle dealer's relevant market area and that are beyond the control of the dealer.                              
14 (c)  Notwithstanding (a) and (b) of this section, if a new motor vehicle dealer                                         
15 claims that the manufacturer has not provided the new motor vehicle dealer with an                                      
16 adequate supply of new motor vehicles, the manufacturer does not have good cause to                                     
17       terminate the franchise agreement under AS 45.25.110, unless                                                      
18 (1)  the manufacturer provided an adequate supply of new motor                                                          
19 vehicles, both in quantity and product mix, for the new motor vehicle dealer's assigned                                 
20 market area, and the manufacturer delivered the supply in a manner that allowed the                                     
21       dealer reasonably to meet the manufacturer's performance standards or goals; and                                  
22 (2)  upon request, the manufacturer provides the new motor vehicle                                                      
23 dealer with documentation that is sufficient for the new motor vehicle dealer to                                        
24 develop a market analysis; the documentation must include the allocation of new                                         
25 motor vehicles to the new motor vehicle dealer and other new motor vehicle dealers in                                   
26 the same zone during the period established by the manufacturer; the new motor                                          
27 vehicle dealer may not share the market analysis with a person that is not involved in                                  
28       preparing the market analysis or terminating the franchise agreement.                                             
29 (d)  Notwithstanding the other provisions of this section, there is good cause to                                       
30       terminate a franchise agreement under AS 45.25.110 if                                                             
31 (1)  the new motor vehicle dealer is insolvent or is the subject of a                                                   
01       bankruptcy or receivership proceeding;                                                                            
02 (2)  the new motor vehicle dealer has failed to conduct its customary                                                   
03 sales and service operations during its customary business hours for seven consecutive                                  
04 business days; this paragraph does not apply to a closure caused by an act or                                           
05       circumstance beyond the direct control of the new motor vehicle dealer;                                           
06                 (3)  the new motor vehicle dealer or a principal operator of the                                        
07       dealership is convicted of a felony; or                                                                           
08                 (4)  the new motor vehicle dealer has had a license revoked or                                          
09       suspended for more than 30 days, if the new motor vehicle dealer is required to have                              
10       the license to operate the new motor vehicle dealership.                                                          
11 (e)  The manufacturer has the burden of proving that good cause exists for                                              
12       termination of a franchise agreement.                                                                             
13    * Sec. 5. AS 45.25.120(a) is amended to read:                                                                      
14 (a)  Before termination of a franchise agreement, a [A] manufacturer shall                                          
15 give [FURNISH] a notice of termination of the [A] franchise agreement to a new                                  
16       motor vehicle dealer at least                                                                                     
17 (1)  90 days before the effective date of a termination, except as                                                      
18       required under (2) or (3) of this subsection;                                                                     
19 (2)  15 days before the effective date of a termination when the [NEW                                                   
20       MOTOR VEHICLE DEALER]                                                                                             
21 (A)  new motor vehicle dealer is insolvent or is the subject of a                                                   
22            bankruptcy or receivership proceeding;                                                                       
23 (B)  new motor vehicle dealer has failed to conduct its                                                             
24 customary sales and service operations during its customary business hours for                                          
25 seven consecutive business days; this subparagraph does not apply to a closure                                      
26 caused by an act [CLOSURES DUE TO ACTS OF GOD] or circumstance                                                  
27 [CIRCUMSTANCES] beyond the direct control of the new motor vehicle                                                      
28            dealer; [OR]                                                                                                 
29 (C)  new motor vehicle dealer or a principal operator of the                                                        
30 dealership is convicted of a felony [INVOLVING MORAL TURPITUDE OR                                                   
31 FRAUD UNDER THE LAW OF THIS STATE, ANOTHER STATE, THE                                                                   
01            FEDERAL GOVERNMENT, A TERRITORY OF THE UNITED STATES,                                                        
02            OR THE DISTRICT OF COLUMBIA]; or                                                                         
03 (D)  new motor vehicle dealer has had a license revoked or                                                          
04 suspended for more than 30 days, if the new motor vehicle dealer is                                                 
05 required to have the license to operate the new motor vehicle dealership;                                           
06            or                                                                                                       
07                 (3)  180 days before the effective date of the termination if the                                       
08       manufacturer or distributor is discontinuing the sale and distribution of the product                         
09       line on a nationwide basis.                                                                                   
10    * Sec. 6. AS 45.25 is amended by adding a new section to read:                                                     
11 Sec. 45.25.135. Termination by dealer. Notwithstanding the terms of a                                                 
12 franchise agreement, a new motor vehicle dealer may terminate a franchise agreement                                     
13 by giving written notice of the termination to the manufacturer at least 90 days before                                 
14       the effective date of the termination.                                                                            
15    * Sec. 7. AS 45.25.140 is repealed and reenacted to read:                                                          
16 Sec. 45.25.140. Payment for inventory, equipment, and other items. (a)                                                
17 Upon the termination of a new motor vehicle dealer's franchise agreement, the                                           
18       manufacturer shall pay the new motor vehicle dealer, at a minimum,                                                
19 (1)  if the new motor vehicles have not been materially altered or                                                      
20 materially damaged and if the new motor vehicles are current models or models the                                       
21 dealer acquired from the manufacturer within the past two model years before receipt                                    
22 of the notice of termination, the new motor vehicle dealer's cost of the unsold new                                     
23 motor vehicles, plus any charges by the manufacturer for distribution, delivery, and                                    
24       taxes, and less                                                                                                   
25 (A)  all allowances paid or credited to the new motor vehicle                                                           
26            dealer by the manufacturer;                                                                                  
27 (B)  repairable damage, except that the manufacturer is not                                                             
28 required to repurchase a damaged motor vehicle if the cost of repairing the                                             
29 damage exceeds five percent of the manufacturer's suggested retail price of the                                         
30 motor vehicle as calculated at the dealer's authorized warranty rate for labor                                          
31            and parts; and                                                                                               
01                      (C)  a mileage charge of 20 cents a mile for all mileage over                                      
02            200 miles on demonstrator vehicles;                                                                          
03 (2)  the new motor vehicle dealer's cost, including any charges by the                                                  
04 manufacturer for distribution, delivery, and taxes, less all allowances that the                                        
05 manufacturer paid or credited to the new motor vehicle dealer, of new motor vehicles                                    
06 required by the manufacturer to be used for loaner, demonstrator, or display purposes;                                  
07 (3)  the new motor vehicle dealer's cost for all unused, undamaged, and                                                 
08       unsold supplies, parts, and accessories in the original unbroken packaging if                                     
09                      (A)  the supply, part, or accessory is listed in the manufacturer's                                
10            current catalog; and                                                                                         
11 (B)  the new motor vehicle dealer acquired the supply, part, or                                                         
12 accessory from the manufacturer or distributor, or the manufacturer required                                            
13            the new motor vehicle dealer to purchase the supply, part, or accessory;                                     
14 (4)  the fair market value of each undamaged sign that is owned by the                                                  
15 new motor vehicle dealer and that bears a common name, trade name, or trademark of                                      
16 the manufacturer, if the manufacturer recommended or required the new motor vehicle                                     
17 dealer to acquire the sign and the sign is in good and usable condition, less reasonable                                
18       wear and tear;                                                                                                    
19 (5)  the fair market value of all equipment, furnishings, and special                                                   
20 tools that the new motor vehicle dealer owns or leases, that the new motor vehicle                                      
21 dealer acquired from the manufacturer or from sources approved by the manufacturer,                                     
22 that the manufacturer recommended or required the new motor vehicle dealer to                                           
23 purchase, and that are in good and usable condition, less reasonable wear and tear;                                     
24 however, if the new motor vehicle dealer leases the equipment, furnishings, or tools,                                   
25 the 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;                                                                                                        
28 (6)  the fair market value of all computers, printers, and software that                                                
29 the manufacturer required or that were reasonably necessary for the new motor vehicle                                   
30 dealer to operate the dealership according to the standards of the manufacturer, except,                                
31 if the new motor vehicle dealer leases the computers, printers, or software, the                                        
01 manufacturer shall pay the new motor vehicle dealer the amount of money that is                                         
02 required for the new motor vehicle dealer to terminate the lease under the lease                                        
03       agreement; and                                                                                                    
04 (7)  the cost to the new motor vehicle dealer to transport, handle, pack,                                               
05 and load the new motor vehicles, supplies, parts, accessories, signs, equipment,                                        
06 furnishings, special tools, computers, printers, and software described in this                                         
07       subsection.                                                                                                       
08 (b)  To the extent the franchise agreement requires the manufacturer to pay or                                          
09 reimburse the new motor vehicle dealer more than the amounts required under (a) of                                      
10       this section, the provisions of the franchise agreement control.                                                  
11 (c)  Within 90 days after the effective date of the termination, the new motor                                          
12 vehicle dealer shall return the property required to be repurchased under (a) of this                                   
13       section to the manufacturer or distributor at the expense of the manufacturer.                                    
14 (d)  The manufacturer shall pay the compensation required under (a) of this                                             
15 section within 30 days after the new motor vehicle dealer tenders the property                                          
16 described in (a) of this section to the manufacturer if the new motor vehicle dealer has                                
17 clear title to the property and is in a position to convey that title to the manufacturer. If                           
18 the property is subject to a security interest, the manufacturer may jointly pay the new                                
19 motor vehicle dealer and the holder of the security interest, and the manufacturer may                                  
20 deduct from the payments the manufacturer is required to make to the new motor                                          
21 vehicle dealer under this section the payments that the manufacturer makes to the                                       
22       holder of the security interest.                                                                                  
23    * Sec. 8. AS 45.25.150 is repealed and reenacted to read:                                                          
24 Sec. 45.25.150. Payments for dealership facilities and business. (a) In                                               
25 addition to the payment required under AS 45.25.140 and (c) of this section, upon                                       
26 termination of a franchise agreement under this chapter, the manufacturer shall, at the                                 
27       request and option of the new motor vehicle dealer, pay the new motor vehicle dealer                              
28 (1)  the dealer's cost for a relocation, substantial alteration, or                                                     
29 remodeling of a dealer's facilities that the manufacturer required for the continuation                                 
30 or renewal of the franchise agreement and that was completed within three years                                         
31       before or after the termination;                                                                                  
01                 (2)  if the new motor vehicle dealer is leasing the new motor vehicle                                   
02       dealership facilities from a lessor other than the manufacturer, an amount of money                               
03       that is equal to the rent for the longer of                                                                       
04                      (A)  the unexpired term of a lease or 24 months, whichever                                         
05            period is shorter; or                                                                                        
06                      (B)  the time provided by the franchise agreement; or                                              
07 (3)  if the new motor vehicle dealer owns the dealership facilities, a                                                  
08 sum of money that is equivalent to the reasonable rental value of the dealership                                        
09 facilities for 24 months or until the facilities are leased or sold, whichever period is                                
10       shorter.                                                                                                          
11 (b)  The payments under (a) of this section are only required to the extent that                                        
12 the new motor vehicle dealer used the facilities for activities under the franchise                                     
13 agreement and only to the extent that the new motor vehicle dealer did not lease the                                    
14       facilities for unrelated purposes.                                                                                
15 (c)  If a manufacturer discontinues the sale and distribution of a new motor                                            
16 vehicle line on a nationwide basis, the manufacturer shall pay the new motor vehicle                                    
17 dealer the fair market value of the franchise as if the dealership were a continuing                                    
18       business.                                                                                                         
19 (d)  If a manufacturer makes a payment under (a) of this section, the                                                   
20 manufacturer is entitled to possess and use the new motor vehicle dealership facility                                   
21       during the period for which the payment is made.                                                                  
22    * Sec. 9. AS 45.25 is amended by adding a new section to read:                                                     
23 Sec. 45.25.155. Application of payment provisions. The provisions of                                                  
24 AS 45.25.140 and 45.25.150 do not apply when a manufacturer terminates a franchise                                      
25       agreement because                                                                                                 
26 (1)  the new motor vehicle dealer is insolvent or is the subject of a                                                   
27       bankruptcy or receivership proceeding;                                                                            
28 (2)  the new motor vehicle dealer has failed to conduct its customary                                                   
29 sales and service operations during its customary business hours for seven consecutive                                  
30 business days; this paragraph does not apply to closures due to acts or circumstances                                   
31       beyond the direct control of the new motor vehicle dealer;                                                        
01                 (3)  the new motor vehicle dealer or a principal operator of the                                        
02       dealership is convicted of a felony;                                                                              
03                 (4)  the new motor vehicle dealer has had a license revoked or                                          
04       suspended for more than 30 days, if the new motor vehicle dealer is required to have                              
05       the license to operate the new motor vehicle dealership;                                                          
06                 (5)  the new motor vehicle dealer has made a fraudulent                                                 
07       misrepresentation to the manufacturer or distributor that is material to the franchise                            
08       agreement; or                                                                                                     
09                 (6)  the new motor vehicle dealer voluntarily enters into an agreement                                  
10 to sell the stock of the new motor vehicle dealer to another person, and the                                            
11       manufacturer approves the agreement.                                                                              
12    * Sec. 10. AS 45.25.160 is repealed and reenacted to read:                                                         
13 Sec. 45.25.160. Sale, transfer, or exchange of a franchise. (a)                                                       
14 Notwithstanding the terms of a franchise agreement, a manufacturer may not withhold                                     
15       consent to the sale, transfer, or exchange of a franchise to a buyer if the buyer                                 
16 (1)  meets the normal, reasonable, and uniformly applied standards                                                      
17 established by the manufacturer for a person to whom the manufacturer may grant an                                      
18       application to be a new motor vehicle dealer;                                                                     
19                 (2)  already holds a franchise from the manufacturer; or                                                
20 (3)  is capable of being licensed as a new motor vehicle dealer in the                                                  
21       state.                                                                                                            
22            (b)  If requested by a manufacturer, the applicant for a franchise shall                                     
23 (1)  promptly provide the personal and financial information that is                                                    
24 reasonably necessary to determine whether the sale, transfer, or exchange should be                                     
25       approved; and                                                                                                     
26 (2)  agree to be bound by all reasonable terms and conditions of the                                                    
27       franchise.                                                                                                        
28 (c)  If a manufacturer refuses to approve the sale, transfer, or exchange of a                                          
29 franchise, the manufacturer shall serve written notice on the applicant and on the                                      
30 transferring, selling, or exchanging new motor vehicle dealer of its refusal to approve                                 
31 the transfer, sale, or exchange of the franchise not later than 60 days after the date the                              
01 manufacturer receives the written request from the new motor vehicle dealer. If the                                     
02 manufacturer has requested personal or financial information from the applicant under                                   
03 (b)(1) of this section, the manufacturer shall serve the notice not later than 60 days                                  
04 after the receipt of the information. Service of a notice under this section shall be                                   
05       made by personal service or certified mail, return receipt requested.                                             
06 (d)  A manufacturer's failure to respond in writing to a request for consent to a                                       
07 sale, transfer, or exchange under (a) of this section within 60 days after receipt of a                                 
08 written request on the forms, if any, generally used by the manufacturer containing the                                 
09 information and reasonable promises required by a manufacturer is considered to be                                      
10       the manufacturer's consent to the request.                                                                        
11 (e)  The notice under (c) of this section must state the specific grounds for the                                       
12       refusal to approve the sale, transfer, or exchange of the franchise.                                              
13 (f)  If an owner of a new motor vehicle franchise enters into an agreement to                                           
14 sell the franchise to a person who is related to the owner in the first or second degree                                
15 or is the husband or wife of a person who is related to the owner in the first or second                                
16 degree, the manufacturer may not exercise a right of first refusal contained in the                                     
17       manufacturer's franchise agreement with the owner.                                                                
18    * Sec. 11. AS 45.25 is amended by adding a new section to read:                                                    
19 Sec. 45.25.165. Mitigation of damages. The provisions of AS 45.25.110 -                                               
20 45.25.160 do not relieve a new motor vehicle dealer of the obligation to mitigate the                                   
21       new motor vehicle dealer's damages upon termination.                                                              
22    * Sec. 12. AS 45.25.170 is repealed and reenacted to read:                                                         
23 Sec. 45.25.170. Succession. (a) Notwithstanding the terms of a franchise                                              
24       agreement, an owner of a new motor vehicle dealer franchise                                                       
25 (1)  may appoint a designated successor to succeed to the ownership of                                                  
26       the new motor vehicle dealer franchise upon the owner's death or incapacity; or                                   
27 (2)  if the owner has owned the franchise for at least five consecutive                                                 
28 years, may appoint a person to succeed to the ownership of the new motor vehicle                                        
29 dealer franchise at the current date, a specific future date, or an undetermined future                                 
30 date of the owner's choosing that is before the new motor vehicle dealer's death or                                     
31       incapacity.                                                                                                       
01 (b)  Notwithstanding the terms of a franchise agreement, a designated                                                   
02 successor described under (a) of this section may succeed to the ownership interest of                                  
03       the dealer under the existing franchise if                                                                        
04 (1)  the person is qualified and experienced in the business of being a                                                 
05 new motor vehicle dealer and meets the normal, reasonable, and uniformly applied                                        
06 standards of a manufacturer to grant an application to a person for a franchise from the                                
07 manufacturer or, in the case of a designated successor who is not experienced in the                                    
08 business of being a new motor vehicle dealer, the person will employ an individual                                      
09 who is qualified and experienced in the business of being a new motor vehicle dealer                                    
10       to help manage the day-to-day operations of the new motor vehicle dealership;                                     
11 (2)  the designated successor gives written notice to the manufacturer of                                               
12 the intention of the designated successor to succeed to the ownership of the new motor                                  
13 vehicle dealer franchise within 60 days after the former owner's death or incapacity or,                                
14 if the appointment is under (a)(2) of this section, at least 30 days before the designated                              
15       successor's proposed succession; and                                                                              
16 (3)  the designated successor agrees to be bound by all terms and                                                       
17       conditions of the existing franchise that are in compliance with the law of this state.                           
18 (c)  The manufacturer may request, and the designated successor shall                                                   
19 promptly provide, the personal and financial information that is reasonably necessary                                   
20       for the manufacturer to determine whether to accept the designated successor.                                     
21 (d)  A manufacturer may refuse to honor the succession to the ownership of a                                            
22 new motor vehicle dealer franchise agreement by a designated successor if the                                           
23 manufacturer establishes that good cause exists for its refusal and if the manufacturer                                 
24 gives written notice to the designated successor and the new motor vehicle dealer of                                    
25 its refusal to accept the designated successor not earlier than 60 days after the date the                              
26 manufacturer receives the notice from the new motor vehicle dealer. However, if the                                     
27 manufacturer has requested personal or financial information from the applicant under                                   
28 (c) of this section, the manufacturer shall give the notice not later than 30 days after                                
29       the manufacturer's receipt of the requested personal or financial information.                                    
30 (e)  The notice under (d) of this section must state the specific grounds for the                                       
31 refusal to honor the succession. If the manufacturer does not serve the notice of refusal                               
01 in a timely and proper manner, the designated successor shall be considered approved                                    
02 and continue to be an approved designated successor to the franchise agreement in full                                  
03       force and effect, subject to termination only as otherwise provided under this chapter.                           
04 (f)  A manufacturer has the burden of proof to show that good cause exists for                                          
05 the refusal to honor the succession to the ownership of a new motor vehicle franchise                                   
06       agreement by a designated successor.                                                                              
07 (g)  This section does not prevent the owner of a new motor vehicle dealer                                              
08 from filing with the manufacturer a written, notarized notice appointing a person as a                                  
09 designated successor. If the notice under this subsection has not been revoked by                                       
10 written notice from the owner to the manufacturer and conflicts with the provisions of                                  
11       this section, the notice given under this subsection governs.                                                     
12 (h)  A manufacturer may not require changes in the capitalization or facilities                                         
13 of a franchise as a condition of approving a family member as a designated successor                                    
14 or a current qualified employee as a designated successor, including a general manager                                  
15 of the franchise, to have full managerial authority for the operating management of the                                 
16       franchise.                                                                                                        
17    * Sec. 13. AS 45.25.180 is repealed and reenacted to read:                                                         
18 Sec. 45.25.180. New or relocated dealership. (a) Before a manufacturer                                                
19 enters into a franchise establishing or relocating a new motor vehicle dealer within a                                  
20 dealer's relevant market area, the manufacturer shall give 90 days' written notice to the                               
21 new motor vehicle dealer holding the relevant market area of the manufacturer's                                         
22 intention to establish an additional new motor vehicle dealer or to relocate an existing                                
23       new motor vehicle dealer within the dealer's relevant market area.                                              
24            (b)  This section does not apply                                                                             
25 (1)  to the relocation of an existing new motor vehicle dealer to a new                                                 
26       location within the relevant market area of the existing new motor vehicle dealer;                                
27 (2)  to the sale or transfer of the ownership or assets of an existing new                                              
28 motor vehicle dealer if the transferee proposes to engage in business representing the                                  
29 same line or make of new motor vehicle at the same location or within 10 miles of that                                  
30       location within the existing new motor vehicle dealer's assigned relevant market area;                            
31 (3)  if the proposed new motor vehicle dealer will establish the                                                        
01 dealership at or within 10 miles of a location within the relevant market area in which                                 
02 a former new motor vehicle dealer of the same line or make of new motor vehicles had                                    
03 ceased operating within the previous 24 months and if the manufacturer had not                                          
04 assigned the location to another new motor vehicle dealer during the period when the                                    
05       former new motor vehicle dealer had stopped operating;                                                            
06 (4)  if the proposed relocation is two miles or less from the existing                                                  
07       location of the relocating new motor vehicle dealer; or                                                           
08 (5)  if the proposed relocation will be located farther away from all                                                   
09 other existing new motor vehicle dealers of the same line or make of new motor                                          
10       vehicle than the existing new motor vehicle dealer.                                                               
11 (c)  Notwithstanding the terms of a franchise agreement and notwithstanding                                             
12 the terms of a waiver, if a manufacturer intends or proposes to establish an additional                                 
13 new motor vehicle dealership or relocate an existing new motor vehicle dealership                                       
14 within or into a relevant market area in which the same line or make of new motor                                       
15 vehicle is represented, the manufacturer shall first establish good cause to establish or                               
16 relocate a dealership. When determining whether good cause exists for permitting the                                    
17 proposed establishment or relocation of a new motor vehicle dealer of the same line or                                  
18       make, the manufacturer shall consider the existing circumstances, including                                       
19 (1)  the extent, nature, and permanency of the investment of the                                                        
20 existing new motor vehicle dealers of the same line or make in the relevant market                                      
21 area and the proposed additional or relocating new motor vehicle dealer, including                                      
22 obligations reasonably incurred by the existing dealer to perform its obligations under                                 
23       its respective franchise;                                                                                         
24 (2)  the growth or decline in population and new motor vehicle                                                          
25       registrations during the past five years in the relevant market area;                                             
26                 (3)  the effect on the consuming public in the relevant market area;                                    
27 (4)  the effect on the existing new motor vehicle dealers in the relevant                                               
28 market area, including any adverse financial effect on the existing new motor vehicle                                   
29       dealer;                                                                                                           
30 (5)  the reasonably expected or anticipated motor vehicle market for the                                                
31 relevant market area, including the age of the population, income, education, size class                                
01 preference, product popularity, retail lease transactions, other demographic factors,                                   
02       and other factors affecting sales to consumers in the relevant market area;                                       
03 (6)  whether establishing an additional new motor vehicle dealer would                                                  
04       injure or benefit the public welfare;                                                                             
05 (7)  whether the new motor vehicle dealer of the same line or make in                                                   
06 the relevant market area is providing adequate competition and convenient customer                                      
07 care for the new motor vehicles of the same line or make in the relevant market area,                                   
08 including a consideration of the service facilities, the equipment, the supply of vehicle                               
09 parts, the qualifications of service personnel, and the number of new motor vehicle                                     
10       sales;                                                                                                            
11 (8)  whether the establishment of an additional new motor vehicle                                                       
12       dealer would increase competition and be in the public interest;                                                  
13 (9)  whether the manufacturer is motivated principally by good faith                                                    
14       and economic considerations to establish an additional or new motor vehicle dealer;                               
15 (10)  whether the manufacturer has denied its existing new motor                                                        
16 vehicle dealer of the same line or make the opportunity for reasonable growth, market                                   
17       expansion, establishment of a satellite location, subagency, or relocation; and                                   
18 (11)  whether the existing dealer is substantially and significantly                                                    
19       violating the franchise agreement or other agreements with the manufacturer.                                      
20 (d)  If a manufacturer intends or proposes to enter into a franchise agreement to                                       
21 establish an additional new motor vehicle dealer within a relevant market area in                                       
22 which the same line or make of new motor vehicle is represented, the manufacturer                                       
23 shall first offer the existing dealer in that relevant market area the opportunity to                                   
24 establish the new dealership as a satellite location of the existing dealer. If the                                     
25 manufacturer believes, in good faith, that the existing new motor vehicle dealer does                                   
26 not, for good cause, qualify to establish the additional dealership, or relocate an                                     
27 existing new motor vehicle dealer within or into a relevant market area in which the                                    
28 same line or make of motor vehicle is then represented, the manufacturer shall provide                                  
29 at least 90 days' advance written notice to each new motor vehicle dealer of the same                                   
30 line or make in the relevant market area of the manufacturer's intention to establish an                                
31 additional new motor vehicle dealer within the relevant market area. The notice shall                                   
01       be sent by certified mail and must include the                                                                    
02                 (1)  specific location at which the additional or relocated new motor                                   
03       vehicle dealer will be established;                                                                               
04                 (2)  date on or after which the additional or relocated new motor                                       
05       vehicle dealer intends to begin business at the proposed location;                                                
06                 (3)  identity of the new motor vehicle dealer who is franchised to sell                                 
07       the same line or make of new motor vehicles as the proposed dealer and who has                                    
08       licensed locations within the relevant market area;                                                               
09                 (4)  names and addresses, if available, of the owners of and principal                                  
10       investors in the proposed additional or relocated new motor vehicle dealership; and                               
11 (5)  specific grounds or reasons for the proposed establishment of an                                                   
12 additional new motor vehicle dealer or relocation of an existing new motor vehicle                                      
13       dealer.                                                                                                           
14 (e)  The manufacturer has the burden of proof to establish that good cause                                              
15 exists for permitting a proposed establishment or relocation of a new motor vehicle                                     
16       dealer under this section.                                                                                        
17    * Sec. 14. AS 45.25 is amended by adding a new section to read:                                                    
18 Sec. 45.25.185. Court actions. (a) Within 30 days after receiving the notice of                                       
19 termination given under AS 45.25.120 or within 30 days after the end of an appeal                                       
20 procedure provided by the manufacturer, whichever event is later, a new motor vehicle                                   
21 dealer may bring an action for declaratory judgment in the superior court to determine                                  
22 whether good cause exists under AS 45.25.115 for the termination of the franchise                                       
23 agreement. If a new motor vehicle dealer files an action under this subsection, the                                     
24 manufacturer may not terminate the franchise agreement until the superior court has                                     
25       issued a decision on the matter.                                                                                  
26 (b)  Within 20 days after receipt of a notice under AS 45.25.160(c) of a                                                
27 manufacturer's refusal to approve a sale, transfer, or exchange of a franchise by a new                                 
28 motor vehicle dealer, the new motor vehicle dealer may file an action in the superior                                   
29 court to determine whether the manufacturer unreasonably withheld consent to the                                        
30       sale, transfer, or exchange of the franchise.                                                                     
31 (c)  Within 30 days after receipt of a notice of disapproval of succession under                                        
01 AS 45.25.170(d), the proposed successor may file an action with the superior court to                                   
02       determine whether the manufacturer has unreasonably withheld approval.                                            
03 (d)  Within 30 days after receiving the notice required under AS 45.25.180(d),                                          
04 or within 30 days after the end of an appeal procedure provided by the manufacturer,                                    
05 whichever is longer, a new motor vehicle dealer may bring an action for declaratory                                     
06 judgment in the superior court to determine whether good cause exists for the                                           
07 establishment or relocation of a proposed new motor vehicle dealer. If a new motor                                      
08 vehicle dealer files an action under this subsection, the manufacturer may not establish                                
09 or relocate the proposed new motor vehicle dealer until the superior court decides the                                  
10       matter.                                                                                                           
11    * Sec. 15. AS 45.25 is amended by adding new sections to article 2 to read:                                        
12 Sec. 45.25.200. Payment and approval of claims. (a) A manufacturer shall                                              
13 pay a new motor vehicle dealer for all repairs performed by a new motor vehicle                                         
14 dealer that are covered under a manufacturer's warranty, policy, or service contract.                                   
15 The manufacturer shall pay for the repairs whether the owner or the dealership                                          
16 personnel identified the need for the repair. A manufacturer shall pay the dealer for the                               
17 repairs in accordance with the new motor vehicle dealer's schedule of compensation                                      
18       that applies to the repairs when the new motor vehicle dealer made the repairs.                                 
19 (b)  A new motor vehicle dealer shall submit a claim for warranty work, policy                                          
20 work, or predelivery service to the manufacturer within 90 days after the owner                                         
21 reclaims the motor vehicle following the new motor vehicle dealer's completion of                                       
22 work on the motor vehicle. The new motor vehicle dealer shall submit the claim in the                                   
23       manner that the manufacturer requires.                                                                            
24 (c)  Within 15 days after the manufacturer receives a claim from a new motor                                            
25 vehicle dealer under (b) of this section, the manufacturer shall approve or deny the                                    
26 claim in writing or electronically. If a manufacturer does not disapprove a claim as                                    
27 required by this subsection, the manufacturer is considered to have approved the claim                                  
28 and the manufacturer shall pay the claim within 30 days after the manufacturer                                          
29       received the claim.                                                                                               
30 (d)  If a manufacturer disapproves a claim that the new motor vehicle dealer                                            
31 submits under (b) of this section, a manufacturer shall notify the new motor vehicle                                    
01 dealer in writing or electronically and shall set out the reasons for disapproving the                                  
02 claim. A new motor vehicle dealer may correct and resubmit the claim within 30 days                                     
03 after the new motor vehicle dealer receives the written or electronic notice that the                                   
04       manufacturer disapproved or denied the claim.                                                                   
05 (e)  Notwithstanding the other provisions of this section, within 15 days after a                                       
06 manufacturer receives a consumer or dealer incentive claim from a new motor vehicle                                     
07 dealer, the manufacturer shall approve or deny the claim by a written or electronic                                     
08 notice of denial. If a manufacturer does not deny the claim in writing or electronically,                               
09 as required by this subsection and (f) of this section, within 15 days after the                                        
10 manufacturer receives the claim, the manufacturer is considered to have approved the                                    
11 claim, and the manufacturer shall pay the claim within 30 days after the manufacturer                                   
12       received the claim.                                                                                               
13 (f)  If the manufacturer denies a claim under (e) of this section, the                                                  
14 manufacturer shall set out the reasons for the denial in the notice of denial. A new                                    
15 motor vehicle dealer may correct and resubmit the claim within 30 days after the new                                    
16 motor vehicle dealer receives the written or electronic notice that the manufacturer                                    
17       disapproved the claim.                                                                                            
18 (g)  A manufacturer may not initiate or conduct an audit to determine the                                               
19 validity of paid claims for new motor vehicle dealer warranty work, policy work,                                        
20 predelivery service claims, or other service claims, or for consumer or new motor                                       
21 vehicle dealer incentive claims, unless the manufacturer initiates the audit within the                                 
22 six months following payment of the claim. The manufacturer may not perform more                                        
23       than one audit in a calendar year.                                                                              
24 (h)  A manufacturer may not deny or charge back to a new motor vehicle                                                  
25 dealer a warranty or policy claim after the initial submission or resubmission of the                                   
26 claim, or as a result of an audit, if the new motor vehicle dealer can reasonably                                       
27 demonstrate that the reason for the repair existed, the repair was performed, and the                                   
28       cause for the repair was cured.                                                                                   
29 (i)  A manufacturer may not recover all or a portion of its costs for                                                   
30 compensating its dealers for parts and labor provided by a new motor vehicle dealer                                     
31 under AS 45.25.210 and this section by using offsets against amounts owed to the new                                    
01       motor vehicle dealer or by making a separate charge, surcharge, or other imposition.                            
02 Sec. 45.25.210. Rates for warranty and other work. (a) A manufacturer shall                                           
03 provide each of its new motor vehicle dealers with the schedule of compensation that                                    
04 the manufacturer shall pay to the new motor vehicle dealer for warranty work, policy                                    
05 work, predelivery service, or other service that the manufacturer requires the new                                      
06       motor vehicle dealer to perform for the manufacturer's products.                                                  
07 (b)  The schedule of compensation must be contained in the franchise                                                    
08 agreement or in a separate agreement with the new motor vehicle dealer. The schedule                                    
09 of compensation must include compensation for parts, labor, and diagnostic work and                                     
10       must comply with this section.                                                                                    
11 (c)  The rates in the schedule of compensation may not be less than the rates                                           
12 that the new motor vehicle dealer charges retail customers for similar service for                                      
13 nonwarranty service, labor on diagnostic work, and repairs. The rates for parts must                                    
14 include the price paid for the part, shipping charges, other charges incurred for the                                   
15 parts, and the average retail percentage markup that the new motor vehicle dealer                                       
16 charges. The rates for labor on diagnostic work must also include any documentation                                     
17 work or contact time that the new motor vehicle dealer spends and the manufacturer                                      
18 requires to authorize or verify the work, including providing photographs, paperwork,                                   
19       consultation, and electronic data.                                                                                
20 (d)  To establish the average retail percentage markup, the new motor vehicle                                           
21 dealer shall submit to the manufacturer 50 sequential chronologically issued retail                                     
22 service repair orders paid by customers, or 45 days of retail service repair orders paid                                
23 by customers if the number of orders during the 45 days is fewer than 50. The orders                                    
24 that the new motor vehicle dealer submits must cover retail repairs that the new motor                                  
25 vehicle dealer made less than 180 days before the new motor vehicle dealer submits                                      
26       them to the manufacturer.                                                                                         
27 (e)  A manufacturer may not require a new motor vehicle dealer to establish                                             
28 the average retail percentage markup by a method other than the method required by                                      
29 (d) of this section. When establishing the average retail percentage markup, a                                          
30 manufacturer may not require the new motor vehicle dealer to provide information                                        
31 that is unduly burdensome or time consuming to provide, including part-by-part or                                       
01       transaction-by-transaction calculations.                                                                          
02            (f)  A manufacturer may not include in the calculation of the rates in the                                   
03       schedule of compensation                                                                                          
04                 (1)  repairs for manufacturer special events, manufacturer specials, or                                 
05       retail customer repair promotional discounts;                                                                     
06                 (2)  for insurance repairs, parts sold at wholesale or at reduced or                                    
07       specially negotiated rates;                                                                                       
08                 (3)  routine maintenance not covered under warranty, including the                                      
09       replacement of fluids, filters, and belts, unless the new motor vehicle dealer provides                           
10       the routine maintenance in the course of making a repair;                                                         
11 (4)  nuts, bolts, fasteners, and similar items that do not have an                                                      
12       individual part number;                                                                                           
13                 (5)  tires, batteries, and light bulbs; and                                                             
14                 (6)  vehicle reconditioning.                                                                            
15 (g)  The average retail percentage markup calculated under (d) of this section                                          
16 may not take effect more than 30 days after the new motor vehicle dealer submits the                                    
17       information required in (d) of this section to the manufacturer.                                                  
18 (h)  A manufacturer may disapprove a rate proposed by the new motor vehicle                                             
19 dealer under this section if the manufacturer demonstrates that the hourly rates or other                               
20 charges under this section unreasonably exceed the rates and charges of all other                                       
21 franchised new motor vehicle dealers in the same relevant market area offering the                                      
22       same motor vehicle line or a competitive motor vehicle line.                                                      
23 (i)  A new motor vehicle dealer may not receive more than one rate increase                                             
24       under this section in a calendar year.                                                                            
25 (j)  In this section, "average retail percentage markup" means the average retail                                       
26       percentage markup established under (d) of this section.                                                          
27 Sec. 45.25.220. Performance and reimbursement of certain repairs. (a) If a                                            
28 manufacturer requires that a certified technician perform a repair on a motor vehicle,                                  
29 and if a certified technician is not available to begin the repair within one business day                              
30 after the delivery of the motor vehicle to a new motor vehicle dealer, an uncertified                                   
31 technician may perform the repair if the uncertified technician performs the repair                                     
01 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 (b)  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                                                
13 compensation, plus any freight or shipping charges, or at the retail rate that is in effect                             
14       when, and in the community where, the repairs are made, whichever amount is less.                                 
15 Sec. 45.25.230. Discontinuation or reduction of line. In this chapter, if a                                           
16 manufacturer discontinues the sale and distribution of a new motor vehicle line, or if a                                
17 manufacturer materially reduces the selection of new motor vehicle lines that the                                       
18 manufacturer is offering to the extent that it is not economically viable for a new                                     
19 motor vehicle dealer to continue to retail the new motor vehicle line, the new motor                                    
20 vehicle dealer may consider the discontinuation or reduction a termination of the                                       
21       franchise agreement between the manufacturer and the new motor vehicle dealer.                                    
22 Sec. 45.25.290. Definition. In AS 45.25.200 - 45.25.230, "schedule of                                                 
23       compensation" means the schedule of compensation provided under AS 45.25.210.                                     
24    * Sec. 16. AS 45.25.300 is repealed and reenacted to read:                                                         
25 Sec. 45.25.300. Unfair practices. (a) Notwithstanding the terms of a franchise                                        
26       agreement, a manufacturer may not                                                                                 
27 (1)  sell, offer to sell, or deliver a new motor vehicle to a new motor                                                 
28 vehicle dealer at a lower price than the price offered to another new motor vehicle                                     
29       dealer for the same model of new motor vehicle that is similarly equipped;                                        
30 (2)  sell, offer to sell, or deliver parts, accessories, equipment, or other                                            
31 items to a new motor vehicle dealer at a lower price than the price offered to another                                  
01       new motor vehicle dealer;                                                                                         
02                 (3)  use a promotion plan, marketing plan, or other similar device that                                 
03       would                                                                                                             
04                      (A)  result in one new motor vehicle dealer being charged a                                        
05            lower price on new motor vehicles, parts, accessories, or other items than                                   
06            another new motor vehicle dealer; or                                                                         
07 (B)  provide a rebate or incentive program that is based on a                                                           
08 new motor vehicle dealer purchasing, selling, or including in inventory a                                               
09 predetermined number or percentage of new motor vehicles, certified pre-                                                
10            owned motor vehicles, or lease return motor vehicles;                                                        
11 (4)  adopt or change a method for the allocation, scheduling, or delivery                                               
12 of new motor vehicles, parts, or accessories to a new motor vehicle dealer if the new                                   
13 or changed method is not fair, reasonable, and equitable; upon request of a new motor                                   
14 vehicle dealer, a manufacturer, distributor, factory branch, or manufacturer                                            
15 representative shall disclose in writing to the dealer the method by which the                                          
16 manufacturer allocates, schedules, or delivers new motor vehicles, parts, and                                           
17 accessories to the manufacturer's new motor vehicle dealers handling the same line or                                   
18       make of vehicles;                                                                                                 
19 (5)  prevent, offset, or otherwise impair a new motor vehicle dealer's                                                  
20 right to request a documentation service fee on purchases made under an affinity                                        
21 program or a similar program, including a promotion plan, marketing plan,                                               
22 manufacturer employee program, new motor vehicle dealer employee program, or                                            
23       employee friends or family purchase program; in this paragraph,                                                   
24 (A)  "affinity program" means a marketing program designed to                                                           
25 increase brand loyalty by developing an ongoing relationship between a new                                              
26            motor vehicle dealer and the customers of the new motor vehicle dealer;                                      
27 (B)  "documentation service fee" means a fee for filling out and                                                        
28            filing paperwork in connection with the sale of a new motor vehicle;                                         
29 (6)  refuse or fail to deliver, in reasonable quantities and within a                                                   
30 reasonable period after receipt of an order, to a new motor vehicle dealer holding a                                    
31 franchise for a line or make of new motor vehicles sold or distributed by the                                           
01       manufacturer, distributor, factory branch, or manufacturer representative a new motor                             
02       vehicle, part, or accessory, if the vehicle, part, or accessory is being delivered to other                       
03       motor vehicle dealers;                                                                                            
04                 (7)  require a dealer to purchase unreasonable advertising displays or                                  
05       other materials;                                                                                                  
06                 (8)  unreasonably require a dealer to remodel or renovate existing                                      
07       facilities as a prerequisite to receiving a model or series of vehicles;                                          
08                 (9)  fail or refuse to offer to its new motor vehicle dealer franchised to                              
09       sell the same line or make of new motor vehicles all models manufactured for that line                            
10       or make of new motor vehicles;                                                                                    
11 (10)  sell, lease, ship, or deliver a new motor vehicle to a person in this                                             
12 state, except directly to a new motor vehicle dealer holding a franchise agreement for                                  
13 the line or make in this state, without a written and revocable agreement by the new                                    
14 motor vehicle dealer holding the relevant market area for the new motor vehicle dealer                                  
15 to deliver the new motor vehicle to a specific person at a specific location; however, it                               
16       is not a violation of this paragraph for                                                                          
17 (A)  a manufacturer to sell, lease, or deliver new motor vehicles                                                       
18            directly to an agency of the federal government; or                                                          
19 (B)  a manufacturer or new motor vehicle dealer to arrange for                                                          
20 the delivery of a new motor vehicle that is sold or leased to a specific customer                                       
21 of another new motor vehicle dealer that is assigned to the relevant market area                                        
22 in which the purchaser or lessor resides, if the manufacturer or new motor                                              
23 vehicle dealer arranges for the delivery by using an agreement with the new                                             
24 motor vehicle dealer that is assigned to the relevant market area in which the                                          
25            purchaser or lessor resides;                                                                                 
26 (11)  own, operate, or control, whether directly or indirectly, a new                                                   
27 motor vehicle dealership in this state, except that a manufacturer may own or operate a                                 
28       new motor vehicle dealership                                                                                      
29 (A)  for a temporary period, not to exceed two years, during the                                                        
30 transition from one owner of the dealership to another owner if a franchised                                            
31 new motor vehicle dealer previously owned the dealership and the dealership is                                          
01 currently for sale at a fair and reasonable price to a qualified person who is                                          
02 independent of the manufacturer, distributor, factory branch, or manufacturer                                           
03            representative; or                                                                                           
04 (B)  in conjunction with another person in a bona fide business                                                         
05 relationship for the purpose of broadening the diversity of its dealers and                                             
06 increasing the opportunities for qualified persons who lack the resources to                                            
07            purchase a dealership completely and immediately, if the person                                              
08 (i)  is not connected by business arrangement to the                                                                    
09 manufacturer, distributor, factory branch, or manufacturer                                                              
10                 representative;                                                                                         
11 (ii)  makes a significant bona fide capital investment in                                                               
12                 the dealership that the person may lose;                                                                
13                           (iii)  has an ownership interest in the dealership; and                                       
14 (iv)  operates the dealership under a bona fide written                                                                 
15 agreement with the manufacturer, distributor, factory branch, or                                                        
16 manufacturer representative under which the person will acquire all of                                                  
17 the ownership interest in the dealership within a reasonable period and                                                 
18 under reasonable terms and conditions; the manufacturer, distributor,                                                   
19 factory branch, or manufacturer representative has the burden of proof                                                  
20 to establish that the person acquired the dealership within a reasonable                                                
21 period and under reasonable terms and conditions; this sub-                                                             
22 subparagraph does not relieve a manufacturer, distributor, factory                                                      
23 branch, or manufacturer representative from complying with the other                                                    
24                 provisions of this paragraph;                                                                           
25 (12)  without the express, continuing, and revocable written consent of                                                 
26 the dealer within the relevant market area, own, operate, or control, whether directly or                               
27 indirectly, a service facility in this state for the repair or maintenance of motor                                     
28 vehicles under the manufacturer's new vehicle warranty, service plans, or extended                                      
29 warranty, or contract with a person other than its franchised new motor vehicle dealer                                  
30 in the relevant market area for payment by the manufacturer to a person for the repair,                                 
31 maintenance, or service of motor vehicles under the manufacturer's new vehicle                                          
01 warranty, extended warranty, or service contract; this paragraph does not prohibit a                                    
02 manufacturer, distributor, factory branch, or manufacturer representative from owning                                   
03 or operating a service facility for the purpose of providing or performing maintenance,                                 
04 repair, or service work on motor vehicles that are owned and operated solely by the                                     
05       manufacturer, distributor, factory branch, or manufacturer representative;                                        
06 (13)  use confidential or proprietary information obtained from a new                                                   
07 motor vehicle dealer to compete with the new motor vehicle dealer or to sell the                                        
08 confidential or proprietary information to another person; in this paragraph,                                           
09 "confidential or proprietary information" includes trade secrets, business plans,                                       
10 marketing plans, marketing strategies, customer lists, contracts, sales data, revenue, or                               
11       other business information;                                                                                       
12 (14)  coerce or attempt to coerce a new motor vehicle dealer to refrain                                                 
13 from or prohibit or attempt to prohibit a new motor vehicle dealer from acquiring,                                      
14 owning, having an investment in, participating in the management of, or holding a                                       
15 franchise agreement for the sale or service of another line or make of new motor                                        
16 vehicles or related products, or establishing another line or make of new motor                                         
17       vehicles or service in the same dealership facilities;                                                            
18 (15)  require, by contract or otherwise, a new motor vehicle dealer to                                                  
19 make a material alteration to, expansion of, or addition to a dealership facility, unless                               
20 the manufacturer uniformly requires similarly situated new motor vehicle dealers of                                     
21 the same motor vehicle line or make to make the alteration, expansion, or addition and                                  
22 the alteration, expansion, or addition is reasonable in light of all existing                                           
23 circumstances, including economic conditions and local market considerations; if an                                     
24 alteration, expansion, or addition is required under this paragraph, the new motor                                      
25       vehicle dealer may select the person to make the alteration, expansion, or addition;                              
26 (16)  require a new motor vehicle dealer to order or accept delivery of a                                               
27 new motor vehicle, part, accessory, piece of equipment, promotional material, display                                   
28 device, display decoration, or other item that is not otherwise required by law and that                                
29 the dealer does not voluntarily order; this paragraph does not apply to the recall of                                   
30 safety and emissions campaign parts unless the dealer voluntarily ordered them, or to a                                 
31 motor vehicle feature, part, accessory, or other component required by federal law, the                                 
01       law of this state, or local law;                                                                                  
02 (17)  coerce or attempt to coerce a new motor vehicle dealer to join,                                                   
03 contribute money to, or affiliate with an advertising association, or to participate                                    
04 monetarily in an advertising campaign, or, if a new motor vehicle dealer chooses to                                     
05 join, contribute monetarily to, or affiliate with an advertising association, require the                               
06 new motor vehicle dealer to use the association funding allocated to the new motor                                      
07 vehicle dealer to run prepackaged radio, television, or newspaper advertising that                                      
08 identifies the association as the advertiser rather than the contributing new motor                                     
09       vehicle dealer;                                                                                                   
10 (18)  prevent or attempt to prevent by contract or another method a new                                                 
11 motor vehicle dealer from changing the executive management of the new motor                                            
12 vehicle dealer unless the manufacturer meets the burden of proof to show that a                                         
13 proposed change of executive management will result in executive management by a                                        
14 person who does not have good moral character or who does not meet reasonable,                                          
15 preexisting, and equitably applied standards of the manufacturer; if a manufacturer                                     
16 rejects a proposed change in the executive management, the manufacturer shall give                                      
17 written notice of its reasons for the rejection to the new motor vehicle dealer within 60                               
18 days after receiving written notice from the new motor vehicle dealer of the proposed                                   
19 change and all related information reasonably requested by the manufacturer; if the                                     
20 manufacturer does not give the written notice within the 60 days, the manufacturer is                                   
21       considered to have approved the change in executive management;                                                   
22 (19)  condition the sale, transfer, relocation, or renewal of a franchise                                               
23       agreement, or condition manufacturer sales, services, or parts incentives on the                                  
24 (A)  manufacturer obtaining site control, including a right to                                                          
25            purchase or lease the new motor vehicle dealer's facility; or                                                
26 (B)  new motor vehicle dealer making facility improvements or                                                           
27 renovations that exceed a gross cost of $5,000 to the new motor vehicle dealer;                                         
28 (20)  coerce, threaten, intimidate, or require a new motor vehicle dealer,                                              
29 as a condition of granting or renewing a franchise agreement, to waive, limit, or                                       
30 disclaim a right that the new motor vehicle dealer may have to protest the                                              
31 establishment or relocation of another motor vehicle dealer in the relevant market                                      
01       area;                                                                                                             
02 (21)  require a new motor vehicle dealer to change the capital structure                                                
03 of the dealership or the means by or through which the new motor vehicle dealer                                         
04 finances the operation of the dealership, unless the dealership does not at all times                                   
05       meet reasonable capital investment requirements;                                                                  
06 (22)  increase the price of a new motor vehicle that the new motor                                                      
07 vehicle dealer has ordered from the manufacturer and for which there exists at the time                                 
08 of the order a bona fide sale to a retail or fleet purchaser if the order was made before                               
09 the manufacturer provided the dealer with an official written price increase                                            
10       notification;                                                                                                     
11 (23)  deliver to a new motor vehicle dealer a new motor vehicle that                                                    
12 does not comply in every respect with equipment requirements required by the law of                                     
13 this state, unless the manufacturer reimburses a dealer to modify the new motor                                         
14       vehicle to meet the equipment requirements; or                                                                    
15                 (24)  fail to indemnify and hold harmless a new motor vehicle dealer                                    
16 (A)  from a court judgment for damages, or settlement of a court                                                        
17            action if the manufacturer approves the settlement in writing; or                                            
18 (B)  if applicable law or the franchise agreement requires the                                                          
19            indemnification and holding harmless.                                                                        
20 (b)  The provisions of (a)(1) - (3) of this section do not apply to sales to a new                                      
21       motor vehicle dealer if the new motor vehicle dealer                                                              
22                 (1)  makes the sale for resale to a federal agency;                                                     
23 (2)  sells or donates the vehicles for use in a driver's education                                                      
24       program;                                                                                                          
25 (3)  makes the sale under a manufacturer's bona fide uniformly applied                                                  
26       promotional program offering sales incentives or rebates;                                                         
27 (4)  sells parts or accessories under a manufacturer's bona fide quantity                                               
28       discount program; or                                                                                              
29 (5)  makes the sale under a manufacturer's bona fide motor vehicle                                                      
30 discount program to a person that owns and operates a fleet of 15 or more new motor                                     
31 vehicles purchased or leased from a dealer where the manufacturer has assigned an                                       
01       identifier code.                                                                                                  
02            (c)  In this section,                                                                                        
03                 (1)  "control" means to possess                                                                         
04                      (A)  title to, or right to exercise 10 percent or more of the voting                               
05            equity interest in a person, whether directly or indirectly through a fiduciary,                             
06            agent, or other intermediary; or                                                                             
07 (B)  directly or indirectly, the power to direct or cause the                                                           
08 direction of the management or policies of a person, whether through the                                                
09 ownership of voting securities, through the power to direct directors, by                                               
10 contract, or by another method, except as expressly provided under the                                                  
11            franchise agreement;                                                                                         
12 (2)  "operate" means to manage a new motor vehicle dealership directly                                                  
13       or indirectly;                                                                                                    
14 (3)  "own" means to hold the beneficial ownership of one percent or                                                     
15 more of a class of equity interest in a new motor vehicle dealership, whether the                                       
16 interest is that of a shareholder, partner, limited liability company member, or                                        
17 otherwise; in this paragraph, "hold" means to have possession of, title to, or control of,                              
18       whether directly or indirectly through a fiduciary, agent, or other intermediary.                                 
19    * Sec. 17. AS 45.25.990(19) is repealed and reenacted to read:                                                     
20 (19)  "terminate" includes to cancel, not to renew, or to discontinue or                                                
21       make a reduction under AS 45.25.230;                                                                              
22    * Sec. 18. AS 45.25.990 is amended by adding new paragraphs to read:                                               
23 (22)  "line or make" means motor vehicles that are offered for sale                                                     
24 under a common name, trademark, service mark, or brand name of the manufacturer                                         
25       of those motor vehicles;                                                                                          
26 (23)  "relevant market area" means the geographical area of                                                             
27       responsibility of a new motor vehicle dealer established in a franchise agreement.                                
28    * Sec. 19. AS 45.25.110(b) and 45.25.110(c) are repealed.                                                          
29    * Sec. 20. The uncodified law of the State of Alaska is amended by adding a new section to                         
30 read:                                                                                                                   
31 APPLICABILITY. (a) Except to the extent that the application under this section                                         
01 would impair valid contractual agreements in violation of a provision of the Constitution of                            
02 the State of Alaska or the Constitution of the United States, this Act applies to franchise                             
03 agreements between manufacturers and new motor vehicle dealers in the state if the franchise                            
04 agreement is                                                                                                            
05            (1)  in existence on the effective date of this Act;                                                         
06            (2)  renewed or amended on or after the effective date of this Act; or                                       
07            (3)  entered into on or after the effective date of this Act.                                                
08       (b)  In this section,                                                                                             
09            (1)  "franchise" has the meaning given in AS 45.25.990;                                                      
10            (2)  "manufacturer" has the meaning given in AS 45.25.990;                                                   
11            (3)  "new motor vehicle dealer" has the meaning given in AS 45.25.990.                                       
12    * Sec. 21. The uncodified law of the State of Alaska is amended by adding a new section to                         
13 read:                                                                                                                   
14 TRANSITION: SCHEDULE OF COMPENSATION. The schedule of compensation                                                      
15 for a new motor vehicle dealer under franchise with a manufacturer on the effective date of                             
16 this Act may not be less than the schedule of compensation provided to the new motor vehicle                            
17 dealer immediately before the effective date of this Act. In this section,                                              
18            (1)  "franchise" has the meaning given in AS 45.25.990;                                                      
19            (2)  "manufacturer" has the meaning given in AS 45.25.990;                                                   
20            (3)  "new motor vehicle dealer" has the meaning given in AS 45.25.990;                                       
21            (4)  "schedule of compensation" means the schedule of compensation provided                                  
22 under AS 45.25.210.