00                             HOUSE BILL NO. 177                                                                          
01 "An Act relating to marine products and motorized recreational products; and                                            
02 providing for an effective date."                                                                                       
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1. AS 45.25.990(12) is amended to read:                                                                  
05                 (12)  "motor vehicle" means a motor vehicle that is required to be                                      
06       registered under AS 28.10, but does not include a motor home, a recreational vehicle,                             
07       or a motorcycle; in this paragraph,                                                                           
08                      (A)  "all-terrain vehicle" has the meaning given in                                            
09            AS 45.27.390;                                                                                            
10                      (B)  "recreational vehicle" includes an all-terrain vehicle                                    
11            and a snow machine;                                                                                      
12                      (C)  "snow machine" has the meaning given in                                                   
13            AS 45.27.390;                                                                                            
14    * Sec. 2. AS 45 is amended by adding a new chapter to read:                                                        
01         Chapter 27. Marine Products and Motorized Recreational Products.                                              
02             Article 1. Agreement Practices of Product Manufacturers.                                                  
03            Sec. 45.27.010. Consent to transfer of agreement. A manufacturer may not                                   
04       unreasonably withhold consent to the sale or other transfer of a dealership agreement                             
05       by an authorized dealer to a transferee if the transferee                                                         
06                 (1)  meets the criteria generally applied by the manufacturer when                                      
07       approving new authorized dealers; and                                                                             
08                 (2)  agrees to be bound by all the terms and conditions of the standard                                 
09       form of the dealership agreement.                                                                                 
10            Sec. 45.27.020. Cancellation or nonrenewal of agreement. (a) A                                             
11       manufacturer may not cancel or decline to renew a dealership agreement with an                                    
12       authorized dealer unless                                                                                          
13                 (1)  the manufacturer has                                                                               
14                      (A)  satisfied the notice requirements of this chapter;                                            
15                      (B)  shown that there is good cause for the cancellation or                                        
16            nonrenewal of the dealership agreement, and, if the reasons underlying the                                   
17            good cause can be corrected by the authorized dealer, the authorized dealer has                              
18            failed for 60 days after delivery of the notice required by AS 45.27.030 to                                  
19            make the corrections; the circumstances identified under AS 45.27.030(a)(2),                                 
20            for which a 15-day notice of cancellation or nonrenewal is required, do not                                  
21            qualify as reasons for which correction is allowed under this paragraph; or                                  
22                 (2)  the authorized dealer has systematically engaged in fraud                                          
23                      (A)  against consumers or the manufacturer; or                                                     
24                      (B)  in the operation of the authorized dealer's dealership.                                       
25            (b)  Notwithstanding (a)(1) of this section, a manufacturer may not cancel or                                
26       decline to renew a dealership agreement with an authorized dealer because of the                                  
27       death or incapacity of an owner if the owner is not listed in the agreement as one on                             
28       whose expertise and abilities the manufacturer relied in the granting of the agreement.                           
29            (c)  In this section, "good cause" includes circumstances in which the                                       
30       authorized dealer fails to comply with or observe a material provision of the dealership                          
31       agreement with the authorized dealer. For the purpose of determining good cause                                   
01       under this subsection, reasonable sales and service performance criteria and capital                              
02       and facility requirements may be considered material provisions only if the criteria or                           
03       requirements were communicated in writing to the authorized dealer within a                                       
04       reasonable period of not less than six months before the effective date of the                                    
05       cancellation or nonrenewal, to afford the authorized dealer a reasonable opportunity to                           
06       comply with the criteria or requirements.                                                                         
07            Sec. 45.27.030. Notice of cancellation or nonrenewal. (a) A manufacturer                                   
08       shall furnish a notice of cancellation or nonrenewal of a dealership agreement with an                            
09       authorized dealer to an authorized dealer at least                                                                
10                 (1)  90 days before the effective date of a cancellation or nonrenewal,                                 
11       except as provided under (2) of this subsection;                                                                  
12                 (2)  15 days before the effective date of a cancellation or nonrenewal                                  
13       when the authorized dealer                                                                                        
14                      (A)  is insolvent or is the subject of a bankruptcy or receivership                                
15            proceeding;                                                                                                  
16                      (B)  is convicted of a felony involving moral turpitude or fraud                                   
17            under the law of this state, another state, the federal government, a territory of                           
18            the United States, or the District of Columbia;                                                              
19                      (C)  has violated a term of the dealership agreement with the                                      
20            manufacturer, the violation of which the manufacturer and the authorized                                     
21            dealer have agreed in the dealership agreement constitutes a basis for                                       
22            cancellation or nonrenewal.                                                                                  
23            (b)  Notice required under (a) of this section must be in writing, shall be sent                             
24       by certified mail or personally delivered to the authorized dealer, and must contain                              
25                 (1)  a statement of intention to cancel or not renew the dealership                                     
26       agreement;                                                                                                        
27                 (2)  a statement of the reasons for the cancellation or nonrenewal; and                                 
28                 (3)  the date on which the cancellation or nonrenewal takes effect.                                     
29            (c)  In this section, "mail" means registered or certified mail, return receipt                              
30       requested.                                                                                                        
31            Sec. 45.27.040. Threat of cancellation or nonrenewal. (a) A manufacturer or                                
01       manufacturer's representative may not coerce or attempt to coerce an authorized dealer                            
02       to enter into a dealership agreement with the manufacturer or a subsidiary of the                                 
03       manufacturer, or to perform any other act unfair to the authorized dealer, by                                     
04       threatening to terminate a dealership agreement between the manufacturer or                                       
05       subsidiary of the manufacturer and the authorized dealer.                                                         
06            (b)  This section does not prohibit a voluntary agreement between a                                          
07       manufacturer and an authorized dealer to settle legitimate disputes.                                              
08            (c)  In this section, "manufacturer's representative" means an employee or                                   
09       agent of a manufacturer who engages in the business of contacting a manufacturer's                                
10       authorized dealer for the purpose of making or promoting the sale of the                                          
11       manufacturer's products or product parts.                                                                         
12            Sec. 45.27.050. Repurchase obligations on cancellation or nonrenewal. (a)                                  
13       On the cancellation or nonrenewal of a dealership agreement by a manufacturer, the                                
14       manufacturer shall repurchase from the authorized dealer's inventory                                              
15                 (1)  each new and unused product of the manufacturer that is a current                                  
16       product model, or a product model from the previous two years; and                                                
17                 (2)  each product part that                                                                             
18                      (A)  was purchased from the manufacturer by the authorized                                         
19            dealer;                                                                                                      
20                      (B)  is listed in the manufacturer's parts price books in the                                      
21            previous two years; and                                                                                      
22                      (C)  has not been damaged or substantially altered to the                                          
23            prejudice of the manufacturer while in the possession of the authorized dealer.                              
24            (b)  Within 90 days after the effective date of the cancellation or nonrenewal,                              
25       the authorized dealer shall return the property required by (a) of this section to be                             
26       repurchased to the manufacturer at the manufacturer's expense. The manufacturer shall                             
27       pay the compensation for the property within 60 days after the tender of inventory and                            
28       other items if the authorized dealer has clear title to the property and is in a position to                      
29       convey that title to the manufacturer. If the property is subject to a security interest,                         
30       the manufacturer may make the payments jointly to the authorized dealer and the                                   
31       holder of the security interest, and the manufacturer may offset the payment.                                     
01            (c)  The amount of a repurchase required by (a) of this section must be based                                
02       on the authorized dealer's landed cost at the authorized dealer's facility, subject to                            
03       adjustments to landed costs for quarterly or annual purchase rebates and credits given                            
04       to the authorized dealer on the products or product parts.                                                        
05                       Article 2. Product Warranties.                                                                  
06            Sec. 45.27.100. Warranty provided. A manufacturer shall provide, through                                   
07       the authorized dealer, to the product's ultimate purchaser from an authorized dealer the                          
08       manufacturer's standard written warranty, if any, that is in effect at the time of delivery                       
09       of the product to the authorized dealer.                                                                          
10            Sec. 45.27.110. Defective products. (a) A manufacturer of a defective product                              
11       shall, during the original warranty period, pay an authorized dealer to complete                                  
12       factory-recommended warranty repairs, solutions, and procedures to cure factory                                   
13       warranty problems with a defective product. The manufacturer shall make the                                       
14       payment in accordance with the standard warranty service claim procedures and                                     
15       methods of the industry and with AS 45.27.100 - 45.27.150.                                                        
16            (b)  A manufacturer shall, within 60 days after an authorized dealer's request,                              
17       provide the authorized dealer with the original factory parts required to perform                                 
18       warranty service on a defective product. If a manufacturer is unable to supply original                           
19       factory parts needed to complete the warranty repairs for a defective product within 60                           
20       days, the authorized dealer may return the defective product and receive full credit for                          
21       the authorized dealer's landed cost of the product, plus 100 percent of the freight                               
22       charges to return the product.                                                                                    
23            (c)  In this section, "defective product" means a product that is defective in                               
24       manufacture, including design, assembly, engineering, or manufacturing.                                           
25            Sec. 45.27.120. Authorized dealer warranty representations. An authorized                                  
26       dealer may not make a representation about the warranty that is not made by the                                   
27       manufacturer in the written warranty. An authorized dealer shall deliver the manuals                              
28       on the operation and maintenance of a product to an ultimate purchaser and make the                               
29       manufacturer's warranty known to the ultimate purchaser, including all disclaimers                                
30       and limitations.                                                                                                  
31            Sec. 45.27.130. Warranty service and claims. (a) An authorized dealer shall                                
01       provide warranty service in accordance with the manufacturer's applicable warranty on                             
02       all of the manufacturer's products sold by the authorized dealer.                                                 
03            (b)  An authorized dealer shall make all claims for warranty reimbursement in                                
04       the manner established by the manufacturer.                                                                       
05            Sec. 45.27.140. Warranty restrictions. A manufacturer may not, by                                          
06       dealership agreement, by restrictions on reimbursement, or by another method, restrict                            
07       the nature or extent of product parts provided or labor performed by an authorized                                
08       dealer if the restriction impairs the authorized dealer's ability to satisfy a warranty                           
09       created by the manufacturer in accordance with generally accepted standards.                                      
10            Sec. 45.27.150. Warranty claim disapproval. If a manufacturer does not                                     
11       approve a claim, the manufacturer shall issue a written notice of disapproval to the                              
12       authorized dealer within 30 days after the manufacturer receives the claim. The notice                            
13       must contain the specific reasons for the disapproval.                                                            
14                  Article 3. Miscellaneous Business Practices.                                                         
15            Sec. 45.27.200. Required posting. (a) An authorized dealer shall post a notice                           
16       of the authorized dealer's retail labor rate in a place conspicuous to service customers.                         
17       If the authorized dealer uses a factory-certified or factory-trained technician to                                
18       perform warranty service work, the notice must also contain a statement that warranty                             
19       service work completed by the authorized dealer is performed by a factory-certified or                            
20       factory-trained technician.                                                                                       
21            (b)  If an authorized dealer's service operations employees receive a                                        
22       commission for the amount of work they perform, the authorized dealer shall post a                                
23       conspicuous sign that is visible to service customers that the authorized dealer's                                
24       service operations employees work on commission.                                                                
25            Sec. 45.27.210. Written estimates for repairs not covered by warranty. (a)                               
26       Before beginning repair work on a product for a customer, an authorized dealer shall                            
27       provide to the customer a written estimate listing the specific parts, labor, and cost of                       
28       the repairs.                                                                                                    
29            (b)  If additional repairs are determined to be necessary after the service                                
30       employees begin repairing the product, the authorized dealer shall contact the                                  
31       customer and receive permission to do additional repairs not covered in the written                               
01       estimate.                                                                                                       
02            (c)  An authorized dealer shall post in a conspicuous place for service                                    
03       customers to view all charges for diagnostics, storage, and other incidentals not                               
04       associated with the actual repair of a product.                                                                   
05            Sec. 45.27.220. Content of factory recall notices. A manufacturer shall                                    
06       include in a written factory recall notice to ultimate purchasers and authorized dealers                          
07       the date by which the manufacturer expects that necessary parts and equipment will be                             
08       available to the authorized dealer for the correction of the defect that is the subject of                        
09       the recall.                                                                                                       
10            Sec. 45.27.230. Replacement of product. The manufacturer of a product that                                 
11       is sold to an ultimate purchaser in the state, that is not more than a year old, and that is                      
12       still under warranty shall replace the product without charge or refund the full                                  
13       purchase price, minus a reasonable amount for mileage, if                                                         
14                 (1)  the authorized dealer is unable to fix a serious defect after                                      
15       attempting to fix the defect four times; or                                                                       
16                 (2)  the product has a defect that prevents the ultimate purchaser from                                 
17       using the product for 30 or more consecutive or inconsecutive days.                                               
18                     Article 4. Miscellaneous Provisions.                                                              
19            Sec. 45.27.250. Unenforceable provisions. If a provision in a dealership                                   
20       agreement violates this chapter, the provision is not enforceable.                                                
21            Sec. 45.27.260. Cumulative provisions. The remedies under this chapter are                                 
22       in addition to any other legal or equitable remedy available under law or under a                                 
23       dealership agreement between an authorized dealer and a manufacturer.                                             
24                       Article 6. General Provisions.                                                                  
25            Sec. 45.27.390. Definitions. In this chapter, unless the context indicates                                 
26       otherwise,                                                                                                        
27                 (1)  "authorized dealer" means a person who has entered into a                                          
28       dealership agreement with a manufacturer of products;                                                             
29                 (2)  "boat" means a marine product that is not equipped with a motor;                                   
30                 (3)  "dealership agreement" means an agreement between a person and                                     
31       a manufacturer of products for the person to sell or service the manufacturer's                                   
01       products;                                                                                                         
02                 (4)  "landed cost" means the total cost of a product delivered at a given                               
03       location, including the initial authorized dealer invoice price and any freight,                                  
04       transportation, flooring expense, interest expense, authorized dealer preparation cost,                           
05       assembly cost, and reasonable handling cost;                                                                      
06                 (5)  "manufacturer" means a person who                                                                  
07                      (A)  fabricates, manufactures, or assembles products;                                              
08            "manufacturer" includes a manufacturer branch and a manufacturer sales                                       
09            representative, but does not include a person who converts, modifies, or                                     
10            otherwise alters a product fabricated, manufactured, or assembled by another                                 
11            person; or                                                                                                   
12                      (B)  is a distribution entity that is                                                              
13                           (i)  owned or controlled by a person described under (A)                                      
14                 of this paragraph; and                                                                                  
15                           (ii)  separate from a person described under (A) of this                                      
16                 paragraph;                                                                                              
17                 (6)  "marine product" means a new watercraft, boat, or motor designed                                   
18       for recreational or commercial use on water; "marine product" includes an outboard                                
19       motor or boat with an attached motor, but does not include a watercraft designed or                               
20       adapted to be powered only by an occupant's energy;                                                               
21                 (7)  "motorized recreational product" means an all-terrain vehicle, a                                   
22       marine motor, a boat, a boat package, a marine product, and a snow machine; in this                               
23       paragraph,                                                                                                        
24                      (A)  "all-terrain vehicle" means a vehicle with three or more                                      
25            low-pressure, flotation-type tires, as designed by the manufacturer or altered,                              
26            to be used as an off-road recreational vehicle;                                                              
27                      (B)  "boat package" means a boat that is equipped and sold with                                    
28            a motor or another form of motorized propulsion;                                                             
29                      (C)  "snow machine" means a motorized vehicle with a gross                                         
30            vehicle weight under 1,300 pounds propelled by a track system designed to                                    
31            move a person over snow or ice, and includes a snowmobile;                                                   
01                 (8)  "part" includes an accessory;                                                                      
02                 (9)  "product" means a marine product or a motorized recreational                                       
03       product;                                                                                                          
04                 (10)  "ultimate purchaser" means the first person, other than an                                        
05       authorized dealer purchasing in the authorized dealer's capacity as an authorized                                 
06       dealer, who, in good faith, purchases a new product for a purpose other than resale.                              
07            Sec. 45.27.395. Short title. This chapter may be cited as the Alaska Marine                                
08       Product and Motorized Recreational Product Act.                                                                   
09    * Sec. 3. AS 45.45.770(a) is amended to read:                                                                      
10            (a)  AS 45.45.700 - 45.45.790 do not apply to                                                                
11                 (1)  a distributorship agreement that would be considered a franchise                                   
12       regulated by 15 U.S.C. 2801 - 2841 (Petroleum Marketing Practices Act);                                           
13                 (2)  a situation regulated by AS 45.50.800 - 45.50.850;                                                 
14                 (3)  a distributorship agreement, including a franchise agreement, for                                  
15       the sale, repair, or servicing of motor vehicles that are required to be registered under                         
16       AS 28.10;                                                                                                         
17                 (4)  an activity or agreement by a person licensed under AS 04 if the                                   
18       activity or agreement is within the scope of the license or is incidental to the activity                         
19       or agreement that is within the scope of the license;                                                             
20                 (5)  a distributorship agreement or another contract between a person                                   
21       licensed under AS 04 and a distributor, manufacturer, importer, supplier, or wholesaler                           
22       of alcoholic beverages who is not located in this state if the subject of the agreement                           
23       or contract is the distribution of alcoholic beverages to the licensed person by the                              
24       distributor, manufacturer, importer, supplier, or wholesaler;                                                     
25                 (6)  a distributor, manufacturer, importer, supplier, or wholesaler of                                  
26       alcoholic beverages;                                                                                              
27                 (7)  a distributorship agreement for the sale or distribution of, or other                              
28       transaction involving, cigarettes, food, drink, or a component of food or drink; in this                          
29       paragraph, "cigarette" has the meaning given in AS 43.50.170; [OR]                                                
30                 (8)  a manufacturer with 50 or fewer employees; or                                                  
31                 (9)  a marine product or motorized recreational product agreement                                   
01       under AS 45.27.                                                                                             
02    * Sec. 4. AS 45.50.471(b) is amended by adding a new paragraph to read:                                            
03                 (56)  violating AS 45.27 (marine products and motorized recreational                                    
04       products).                                                                                                        
05    * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to                          
06 read:                                                                                                                   
07       APPLICABILITY. This Act does not apply to a dealership agreement that is entered                                  
08 into before the effective date of this Act. In this section, "dealership agreement" has the                             
09 meaning given in AS 45.27.390, enacted by sec. 2 of this Act.                                                         
10    * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).