House File 2060
HOUSE FILE
BY CARROLL
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to business relationships between persons
2 involved in the sale of personal mobile vehicles, including
3 motorcycles, all=terrain vehicles, snowmobiles, and personal
4 watercraft, and providing for applicability.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
6 TLSB 5295YH 80
7 da/gg/14
PAG LIN
1 1 Section 1. Section 322D.1, subsections 2, 5, 6, and 10,
1 2 Code Supplement 2003, are amended to read as follows:
1 3 2. "Attachment" means a machine or part of a machine
1 4 designed to be used on and in conjunction with a farm
1 5 implement, motorcycle, all=terrain vehicle, or snowmobile or
1 6 personal mobile vehicle.
1 7 2A. "Equipment" means a farm implement, personal mobile
1 8 vehicle, or a related part or attachment.
1 9 5. "Franchisee" means a person who receives farm
1 10 implements, motorcycles, all=terrain vehicles, snowmobiles, or
1 11 related parts or attachments equipment from the a franchiser
1 12 under a franchise and who offers and sells the farm
1 13 implements, motorcycles, all=terrain vehicles, snowmobiles, or
1 14 related parts or attachments equipment to the general public.
1 15 6. "Franchiser" means a person who manufactures,
1 16 wholesales, or distributes farm implements, motorcycles, all=
1 17 terrain vehicles, snowmobiles, or related parts or
1 18 attachments, equipment and who enters into a franchise.
1 19 10. "Person" means a sole proprietor, partnership,
1 20 corporation, or any other form of business organization an
1 21 individual or business association as defined in section
1 22 202B.102.
1 23 10A. "Personal mobile vehicle" means an all=terrain
1 24 vehicle, motorcycle, personal watercraft, or snowmobile.
1 25 10B. "Personal watercraft" means the same as defined in
1 26 section 462A.2.
1 27 Sec. 2. Section 322D.1, subsection 4, paragraphs b and e,
1 28 Code Supplement 2003, are amended to read as follows:
1 29 b. The franchisee is granted the right to offer and sell
1 30 farm implements, motorcycles, all=terrain vehicles,
1 31 snowmobiles, or related parts or attachments equipment
1 32 manufactured or distributed by the franchiser.
1 33 e. The operation of the franchisee's business is
1 34 substantially reliant on the franchiser for the continued
1 35 supply of farm implements, motorcycles, all=terrain vehicles,
2 1 snowmobiles, or related parts or attachments equipment.
2 2 Sec. 3. Section 322D.2, subsection 1, unnumbered paragraph
2 3 1, Code Supplement 2003, is amended to read as follows:
2 4 A franchisee who enters into a written franchise with a
2 5 franchiser to maintain a stock of farm implements,
2 6 motorcycles, all=terrain vehicles, snowmobiles, or related
2 7 parts or attachments equipment has the following rights to
2 8 payment, at the option of the franchisee, if the franchise is
2 9 terminated:
2 10 Sec. 4. Section 322D.2, subsection 1, paragraph a, Code
2 11 Supplement 2003, is amended to read as follows:
2 12 a. One hundred percent of the net cost of new, unused,
2 13 complete farm implements, motorcycles, all=terrain vehicles,
2 14 snowmobiles, or related attachments, equipment which were was
2 15 purchased from the franchiser. In addition, the franchisee
2 16 shall have a right of payment for transportation charges on
2 17 the farm implements, motorcycles, all=terrain vehicles, or
2 18 snowmobiles, equipment which have been paid by the franchisee.
2 19 Sec. 5. Section 322D.2, subsections 2 and 3, Code
2 20 Supplement 2003, are amended to read as follows:
2 21 2. Upon receipt of the payments due under subsection 1,
2 22 the franchiser is entitled to possession of and title to the
2 23 farm implements, motorcycles, all=terrain vehicles,
2 24 snowmobiles, or related parts or attachments equipment.
2 25 3. The cost of farm implements, motorcycles, all=terrain
2 26 vehicles, snowmobiles, or related attachments equipment and
2 27 the price of repair parts shall be determined by reference to
2 28 the franchiser's price list or catalog in effect at the time
2 29 of the franchise termination.
2 30 Sec. 6. NEW SECTION. 322D.2A WARRANTIES == PERSONAL
2 31 MOBILE VEHICLES.
2 32 This section applies to a franchise of personal mobile
2 33 vehicles, or related parts or attachments.
2 34 1. The franchiser shall satisfy its warranty obligations
2 35 within a reasonable time.
3 1 2. If the franchisee performs labor or provides parts in
3 2 satisfaction of a warranty required to be honored by the
3 3 franchiser, all of the following shall apply:
3 4 a. The franchiser shall reimburse the franchisee for parts
3 5 supplied by the franchisee and for labor performed by the
3 6 franchisee under the warranty.
3 7 (1) The franchiser shall reimburse the franchisee for
3 8 parts at the published manufacturer's suggested retail price
3 9 at the time of retail sale.
3 10 (2) The franchiser shall reimburse the franchisee for
3 11 labor at the retail rate customarily charged by the franchisee
3 12 for performing the same labor not performed to honor a
3 13 warranty. The franchisee shall post the rates for performing
3 14 labor not performed to honor a warranty in a conspicuous place
3 15 on the franchisee's premises in a manner to reasonably notify
3 16 its customers.
3 17 b. A franchisee may make a claim to a franchiser to be
3 18 reimbursed for parts provided or labor performed in honoring
3 19 the franchiser's warranty obligation. The franchiser must
3 20 approve or disapprove the claim within thirty days from the
3 21 date that the franchiser receives the claim.
3 22 (1) If any part of the claim is approved, the franchiser
3 23 must reimburse the franchisee the amount of the approved claim
3 24 within the thirty=day period.
3 25 (2) If any part of the claim is disapproved, the
3 26 franchisee must receive a notice of the disapproval within
3 27 that thirty=day period. The notice must be in writing and
3 28 state each reason for the disapproval. If the franchisee is
3 29 the prevailing party in an action to recover the amount
3 30 disputed in a claim, the franchisee shall be awarded
3 31 reasonable attorney fees plus court costs, which shall be
3 32 taxed as part of the costs of the action.
3 33 3. An agreement executed between the franchiser and
3 34 franchisee is void if it does any of the following:
3 35 a. Provides for a rate of reimbursement that is less than
4 1 provided in this section.
4 2 b. Restricts or impairs the ability of a franchisee to
4 3 provide parts or perform labor necessary to honor a warranty
4 4 obligation according to generally accepted standards for the
4 5 business.
4 6 Sec. 7. Section 322D.3, subsections 7 and 9, Code
4 7 Supplement 2003, are amended to read as follows:
4 8 7. A farm implement, motorcycle, all=terrain vehicle, or
4 9 snowmobile or personal mobile vehicle which is not in new,
4 10 unused, undamaged, or complete condition.
4 11 9. A farm implement, motorcycle, all=terrain vehicle, or
4 12 snowmobile or personal mobile vehicle which was purchased
4 13 twenty=four months or more prior to the termination of the
4 14 franchise.
4 15 Sec. 8. Section 322D.9, subsection 1, Code 2003, is
4 16 amended to read as follows:
4 17 1. This chapter applies to a franchise for all=terrain
4 18 vehicles only if chapter 322F does not apply to a dealership
4 19 engaged in the retail sale of equipment designed to be
4 20 principally used for an agricultural operations purpose under
4 21 chapter 322F.
4 22 Sec. 9. NEW SECTION. 322D.11 APPLICATION == PERSONAL
4 23 WATERCRAFT.
4 24 The rights under section 322D.2, subsection 1, apply to
4 25 personal watercraft franchise agreements in effect on July 1,
4 26 2004, which have no expiration date and are continuing
4 27 franchises, and to franchises executed or renewed on or after
4 28 July 1, 2004, but only to personal watercraft and related
4 29 parts or attachments purchased on or after July 1, 2004.
4 30 Sec. 10. NEW SECTION. 322D.12 APPLICATION == PERSONAL
4 31 MOBILE VEHICLES.
4 32 The rights under section 322D.2A shall apply to franchise
4 33 agreements for personal mobile vehicles as follows:
4 34 1. All franchises in effect on July 1, 2004, that have no
4 35 expiration date and are continuing franchises.
5 1 2. Franchises that have been executed or renewed on or
5 2 after July 1, 2004, but only for personal mobile vehicles and
5 3 related parts or attachments purchased on or after July 1,
5 4 2004.
5 5 Sec. 11. NEW SECTION. 322F.3A WARRANTIES == ALL=TERRAIN
5 6 VEHICLES.
5 7 This section applies to a dealership agreement which
5 8 provides that the dealer is granted the right to sell,
5 9 distribute, or service all=terrain vehicles as provided in
5 10 this chapter.
5 11 1. The supplier shall satisfy its warranty obligations
5 12 within a reasonable time.
5 13 2. If the dealer performs labor or provides parts in
5 14 satisfaction of a warranty required to be honored by the
5 15 supplier, all of the following shall apply:
5 16 a. The supplier shall reimburse the dealer for parts
5 17 supplied by the dealer and for labor performed by the dealer
5 18 under the warranty.
5 19 (1) The supplier shall reimburse the dealer for parts at
5 20 the published manufacturer's suggested retail price at the
5 21 time of retail sale.
5 22 (2) The supplier shall reimburse the dealer for labor at
5 23 the retail rate customarily charged by the dealer for
5 24 performing the same labor not performed to honor a warranty.
5 25 The dealer shall post the rates for performing labor not
5 26 performed to honor a warranty in a conspicuous place on the
5 27 dealer's premises in a manner to reasonably notify its
5 28 customers.
5 29 b. A dealer may make a claim to a supplier to be
5 30 reimbursed for parts provided or labor performed in honoring
5 31 the supplier's warranty obligation. The supplier must approve
5 32 or disapprove the claim within thirty days from the date that
5 33 the supplier receives the claim.
5 34 (1) If any part of the claim is approved, the supplier
5 35 must reimburse the dealer the amount of the approved claim
6 1 within the thirty=day period.
6 2 (2) If any part of the claim is disapproved, the dealer
6 3 must receive a notice of the disapproval within that thirty=
6 4 day period. The notice must be in writing and state each
6 5 reason for the disapproval.
6 6 3. An agreement executed between the supplier and dealer
6 7 is void if it does any of the following:
6 8 a. Provides for a rate of reimbursement that is less than
6 9 provided in this section.
6 10 b. Restricts or impairs the ability of a dealer to provide
6 11 parts or perform labor necessary to honor a warranty
6 12 obligation according to generally accepted standards for the
6 13 business.
6 14 Sec. 12. Section 322F.9, subsection 2, Code Supplement
6 15 2003, is amended by adding the following new paragraph:
6 16 NEW PARAGRAPH. d. For provisions in dealership agreements
6 17 governing warranties for all=terrain vehicles, section 322F.3A
6 18 applies to those provisions in effect that have no expiration
6 19 date and all other such provisions in dealership agreements
6 20 entered into or renewed on or after July 1, 2004. For any
6 21 such provision in a dealership agreement in effect on July 1,
6 22 2004, which by its own terms will terminate on a subsequent
6 23 date, the dealership agreement shall be governed by the law as
6 24 it existed prior to July 1, 2004.
6 25 EXPLANATION
6 26 This bill regulates franchise agreements between persons
6 27 merchandising certain equipment referred to as personal mobile
6 28 vehicles. It amends two related Code chapters: 322D and
6 29 322F. Historically, Code chapter 322D governed agricultural
6 30 equipment and motorcycle franchises. Generally, Code chapter
6 31 322D's regulation of agricultural equipment franchises was
6 32 supplanted by Code chapter 322F in 1990. The new Code chapter
6 33 covers franchise relationships based on agreements executed or
6 34 renewed on or after July 1, 1990, or agreements without any
6 35 expiration date. Code chapter 322D continues to govern
7 1 motorcycle dealerships and other agricultural franchise
7 2 agreements. While Code chapter 322F refers to the
7 3 merchandisers as dealerships and their agreements with
7 4 suppliers as dealership agreements, Code chapter 322D refers
7 5 to merchandisers as franchisees and their agreements with
7 6 franchisers as franchise agreements. Both Code chapters
7 7 regulate these business relationships by specifying rights and
7 8 obligations for both parties. They also place restrictions on
7 9 franchiser practices, provide for their liability, and make
7 10 remedies available to the franchisee.
7 11 In 2002, the general assembly enacted legislation which
7 12 provides that Code chapter 322D covers franchise agreements
7 13 for the merchandising of all=terrain vehicles. It also
7 14 provided that for franchisers of agricultural equipment
7 15 governed under new Code chapter 322F who also merchandised
7 16 all=terrain vehicles, the provisions of the new Code chapter
7 17 would apply to them. In 2003, the franchise law was amended
7 18 again. In part, Code chapter 322D's provisions were extended
7 19 to cover franchise agreements for the merchandising of
7 20 snowmobiles.
7 21 The bill amends both Code chapters 322D and 322F. It
7 22 amends the definitions in Code chapter 322D in order to
7 23 enhance the Code chapter's readability. For purposes of
7 24 reference, the bill refers to motorcycles, all=terrain
7 25 vehicles, snowmobiles, and personal watercraft as "personal
7 26 mobile vehicles". It refers to farm implements as well as
7 27 personal mobile vehicles and associated attachments as
7 28 "equipment".
7 29 Substantively, the bill requires that the provisions of
7 30 Code chapter 322D apply to cover personal watercraft (a vessel
7 31 less than 16 feet in length, propelled by a water jet pump or
7 32 similar machinery, and designed to be operated by a person
7 33 sitting, standing, or kneeling on the vessel), such as a "jet
7 34 ski".
7 35 In addition, the bill provides additional restrictions upon
8 1 franchise agreements involving personal mobile vehicles under
8 2 Code chapter 322D and all=terrain vehicles under Code chapter
8 3 322F. The new provisions concern warranties. Under the bill,
8 4 a franchiser must satisfy its warranty obligations within a
8 5 reasonable time. If a franchisee honors a warranty by
8 6 providing parts or performing labor, the franchiser must
8 7 reimburse the franchisee. The bill regulates the amount of
8 8 the reimbursement based on parts and labor ordinarily charged
8 9 absent a warranty. It also provides for the submission of
8 10 claims by the franchisee and the approval or disapproval of
8 11 those claims by the franchiser. The bill amends Code chapter
8 12 322D to provide that if the franchisee prevails in a legal
8 13 action based on a disapproved claim, the franchiser is
8 14 obligated to pay the franchisee reasonable attorney fees plus
8 15 court costs. A similar provision already exists under Code
8 16 chapter 322F. The bill also provides that any agreement which
8 17 provides terms contrary to those in the bill are void.
8 18 The bill provides special applicability provisions for
8 19 franchise agreements involving personal mobile vehicles under
8 20 Code chapter 322D and for all=terrain vehicles under Code
8 21 chapter 322F which are based on those provisions enacted in
8 22 prior years. Generally, the provisions of the bill do not
8 23 apply to a franchise agreement which is effective on July 1,
8 24 2004, and which is to expire.
8 25 LSB 5295YH 80
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