H.B. No. 2640
 
 
 
 
AN ACT
  relating to the regulation of motor vehicle manufacturers and
  distributors.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 2301.257, Occupations Code, is amended
  by adding Subsection (d) to read as follows:
         (d)  The act of filing an application under this section or a
  form prescribed under this section does not establish the applicant
  as a franchised dealer.
         SECTION 2.  Section 2301.360(b), Occupations Code, is
  amended to read as follows:
         (b)  In a protest under this section, the board must
  determine whether the rejection was reasonable under the criteria
  described by Section 2301.359 [prospective transferee is
  qualified]. The burden is on the manufacturer or distributor to
  prove that the prospective transferee is not qualified under the
  criteria. The board shall enter an order holding that the
  prospective transferee either is qualified or is not qualified.
         SECTION 3.  Section 2301.464(a), Occupations Code, is
  amended to read as follows:
         (a)  Not later than the 60th day before the date a franchised
  dealer proposes to begin the relocation of a dealership, the dealer
  must provide written notice of the dealer's intent to relocate to
  the dealer's manufacturer, distributor, or representative. The
  notice must be sent by certified mail, return receipt requested.
  Notwithstanding the terms of any franchise, a manufacturer,
  distributor, or representative may not deny or withhold approval of
  a written application to relocate a franchise unless:
               (1)  the applicant receives written notice of the
  denial or withholding of approval not later than the 60th day after
  the date the application is received; and
               (2)  if the applicant files a protest with the board,
  the board makes a determination of reasonable grounds under this
  section.
         SECTION 4.  Section 2301.465, Occupations Code, is amended
  by amending Subsections (a) and (b) and adding Subsections (h) and
  (i) to read as follows:
         (a)  In this section:
               (1)  "Net cost" means the franchised dealer cost for a
  new, unsold, undamaged, and complete motor vehicle [of the current
  model year or the previous model year] in a dealer's inventory:
                     (A)  plus any charges by the manufacturer,
  distributor, or representative for distribution, delivery, and
  taxes; and
                     (B)  less all allowances paid to the franchised
  dealer by the manufacturer, distributor, or representative.
               (2)  "Net discount value" is the net cost multiplied by
  the total mileage, exclusive of mileage placed on the motor vehicle
  before it was delivered to the dealer, divided by 100,000.
         (b)  Notwithstanding the terms of any franchise, after the
  termination of a franchise, a manufacturer, distributor, or
  representative shall pay to a franchised dealer or any lienholder,
  in accordance with the interest of each, the following amounts:
               (1)  the dealer cost of each new motor vehicle in the
  dealer's inventory with mileage of 5,000 [6,000] miles or less,
  exclusive of mileage placed on the vehicle before it was delivered
  to the dealer, reduced by the net discount value of each vehicle,
  except that if a vehicle cannot be reduced by the net discount
  value, the manufacturer or distributor shall pay the dealer the net
  cost of the vehicle;
               (2)  the dealer cost of each new, unused, undamaged,
  and unsold part or accessory that:
                     (A)  is in the current parts catalogue and is
  still in the original, resalable merchandising package and in an
  unbroken lot, except in the case of sheet metal, a comparable
  substitute for the original package may be used; and
                     (B)  was purchased by the dealer either directly
  from the manufacturer or distributor or from an outgoing authorized
  dealer as a part of the dealer's initial inventory;
               (3)  the fair market value of each undamaged sign owned
  by the dealer that bears a trademark or tradename used or claimed by
  the manufacturer, distributor, or representative and that was
  purchased from or at the request of the manufacturer, distributor,
  or representative;
               (4)  the fair market value of all special tools, data
  processing equipment, and automotive service equipment owned by the
  dealer that:
                     (A)  were recommended in writing and designated as
  special tools and equipment;
                     (B)  were purchased from or at the request of the
  manufacturer, distributor, or representative; and
                     (C)  are in usable and good condition except for
  reasonable wear and tear; and
               (5)  the cost of transporting, handling, packing,
  storing, and loading any property subject to repurchase under this
  section.
         (h)  Notwithstanding any other law, this section does not
  require a manufacturer, distributor, or representative to
  repurchase a motor vehicle that:
               (1)  at the time of termination of the franchise had
  been in the dealer's inventory for at least 24 months after the date
  the dealer took delivery of the vehicle; or
               (2)  the dealer purchased not more than 30 days before
  the date of termination of the franchise solely in anticipation of
  the termination and, in the ordinary course of business, would not
  have purchased.
         (i)  For purposes of this section, a sale of the assets or
  stock of a dealership to a buyer who continues the operation of the
  dealership is not a termination of a franchise.
         SECTION 5.  Section 2301.467, Occupations Code, is amended
  to read as follows:
         Sec. 2301.467.  PROHIBITIONS: SALES STANDARDS, RELOCATIONS,
  FACILITY CHANGES, PURCHASE OF EQUIPMENT. (a)  Notwithstanding the
  terms of any franchise, a manufacturer, distributor, or
  representative may not:
               (1)  require adherence to unreasonable sales or service
  standards; or
               (2)  unreasonably require a franchised dealer to
  purchase special tools or equipment.
         (b)  Notwithstanding the terms of any franchise, a
  manufacturer, distributor, or representative may not unreasonably
  require a franchised dealer to relocate, or to replace or
  substantially change, alter, or remodel the dealer's facilities.  
  For purposes of this subsection, an act is reasonable if it is
  justifiable in light of current and reasonably foreseeable
  projections of economic conditions, financial expectations, and
  the market for new motor vehicles in the relevant market area.
         (c)  The prohibitions under this section apply to the
  relationship between a manufacturer and:
               (1)  a current franchisee of the manufacturer; or
               (2)  a franchised dealer who is seeking to become a
  franchisee of the manufacturer.
         SECTION 6.  Section 2301.472(d), Occupations Code, is
  amended to read as follows:
         (d)  In determining whether a manufacturer or distributor
  has established that the denial or withholding of approval is
  reasonable, the board shall consider all existing circumstances,
  including:
               (1)  the dealer's sales in relation to the sales in the
  market;
               (2)  the dealer's investment and obligations;
               (3)  injury or benefit to the public;
               (4)  the adequacy of the dealer's sales and service
  facilities, equipment, parts, and personnel in relation to those of
  other dealers of new motor vehicles of the same line-make;
               (5)  whether warranties are being honored by the dealer
  agreement;
               (6)  the parties' compliance with the franchise, except
  to the extent that the franchise conflicts with this chapter;
               (7)  the enforceability of the franchise from a public
  policy standpoint, including issues of the reasonableness of the
  franchise's terms, oppression, adhesion, and the parties' relative
  bargaining power;
               (8)  whether the dealer complies with reasonable
  capitalization requirements or will be able to comply with
  reasonable capitalization requirements within a reasonable time;
               (9)  any harm to the manufacturer or distributor if the
  denial or withholding of approval is not upheld; [and]
               (10)  any harm to the dealer if the denial or
  withholding of approval is upheld;
               (11)  the manufacturer's or distributor's investment
  and obligations; and
               (12)  whether the denial or withholding of approval is
  justified in light of current and reasonably foreseeable
  projections of economic conditions, financial expectations, and
  the market for new motor vehicles in the relevant market area.
         SECTION 7.  Section 2301.475, Occupations Code, is amended
  by adding Subsection (c) to read as follows:
         (c)  Money paid by a manufacturer or distributor under an
  incentive program may only be paid to a dealer, unless the dealer
  agrees to the payment of the money to another person, including an
  employee of the dealer, before the payment is made.
         SECTION 8.  Subchapter J, Chapter 2301, Occupations Code, is
  amended by adding Section 2301.479 to read as follows:
         Sec. 2301.479.  ADVERSE ACTION IN CONNECTION WITH EXPORT OF
  VEHICLE.  (a)  Except as otherwise provided by this section, a
  manufacturer, distributor, or representative may not take an
  adverse action against a franchised dealer because the franchised
  dealer sells or leases a vehicle that is later exported to a
  location outside the United States.
         (b)  A franchise provision that allows a manufacturer,
  distributor, or representative to take adverse action against a
  franchised dealer because the franchised dealer sells or leases a
  vehicle that is later exported to a location outside the United
  States is enforceable only if, at the time of the original sale or
  lease, the dealer knew or reasonably should have known that the
  vehicle would be exported to a location outside the United States.
         (c)  A franchised dealer is presumed to have no actual
  knowledge that a vehicle the dealer sells or leases will be exported
  to a location outside the United States if, under the laws of a
  state of the United States:
               (1)  the vehicle is titled;
               (2)  the vehicle is registered; and
               (3)  applicable state and local taxes are paid for the
  vehicle.
         (d)  The presumption under Subsection (c) may be rebutted by
  direct, clear, and convincing evidence that the franchised dealer
  had actual knowledge or reasonably should have known at the time of
  the original sale or lease that the vehicle would be exported to a
  location outside the United States.
         (e)  Except as otherwise permitted by this section, a
  franchise provision that allows a manufacturer, distributor, or
  representative to take adverse action against a franchised dealer
  because the franchised dealer sells or leases a vehicle that is
  later exported to a location outside the United States is void and
  unenforceable.
         SECTION 9.  Sections 2301.652(a) and (c), Occupations Code,
  are amended to read as follows:
         (a)  The board may deny an application for a license to
  establish a dealership if, following a protest, the applicant fails
  to establish good cause for establishing the dealership. In
  determining good cause, the board shall consider:
               (1)  whether the manufacturer or distributor of the
  same line-make of new motor vehicle is being adequately represented
  as to sales and service;
               (2)  whether the protesting franchised dealer
  representing the same line-make of new motor vehicle is in
  substantial compliance with the dealer's franchise, to the extent
  that the franchise is not in conflict with this chapter;
               (3)  the desirability of a competitive marketplace;
               (4)  any harm to the protesting franchised dealer;
  [and]
               (5)  the public interest;
               (6)  any harm to the applicant; and
               (7)  current and reasonably foreseeable projections of
  economic conditions, financial expectations, and the market for new
  motor vehicles in the relevant market area.
         (c)  A franchised dealer may not protest an application to
  relocate a dealership under this section if the proposed relocation
  site is not:
               (1)  more than two miles [one mile] from the site where
  the dealership is currently located; or
               (2)  closer to the franchised dealer than the site from
  which the dealership is being relocated.
         SECTION 10.  (a) The change in law made by this Act applies
  only to an agreement entered into or renewed under Chapter 2301,
  Occupations Code, on or after the effective date of this Act. An
  agreement entered into or renewed before the effective date of this
  Act is governed by the law in effect on the date the agreement was
  entered into or renewed, and the former law is continued in effect
  for that purpose.
         (b)  The change in law made by this Act applies only to an
  application filed under Chapter 2301, Occupations Code, on or after
  the effective date of this Act. An application filed before that
  date is governed by the law in effect on the date the application
  was filed, and the former law is continued in effect for that
  purpose.
         SECTION 11.  This Act takes effect September 1, 2009.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2640 was passed by the House on April
  30, 2009, by the following vote:  Yeas 143, Nays 1, 1 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 2640 on May 20, 2009, by the following vote:  Yeas 134, Nays 0,
  1 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 2640 was passed by the Senate, with
  amendments, on May 18, 2009, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor