HF 2467 (LSB 5703HV (2) 83)

HOUSE FILE 2467

BY  COMMITTEE ON TRANSPORTATION

(SUCCESSOR TO HSB 614)

A BILL FOR

An Act relating to the regulation of motor vehicle franchises.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 322A.1, subsection 5, paragraph d, Code 2009, is amended to read as follows:
   d.  The operation of the franchisee’s business is substantially associated with the franchiser’s trademark, service mark, trade name, advertising, or other commercial symbol designating the franchiser.
    Sec. 2.  Section 322A.1, subsection 5, Code 2009, is amended to read as follows:
   5.  a.  “Franchise” means a contract between two or more persons when all of the following conditions are included:
   a.  (1)  A commercial relationship of definite duration or continuing indefinite duration is involved.
   b.  (2)  The franchisee is granted the right to offer and sell motor vehicles manufactured or distributed by the franchiser.
   c.  (3)  The franchisee, as an independent business, constitutes a component of franchiser’s distribution system.
   d.  (4)  The operation of franchisee’s business is substantially associated with the franchiser’s trademark, service mark, trade name, advertising, or other commercial symbol designating the franchiser.
   e.  (5)  The operation of the franchisee’s business is substantially reliant on franchiser for the continued supply of motor vehicles, parts, and accessories.
   b.  “Franchise” includes a separate agreement between the franchisee and the franchiser which relates to the franchise, whether entered into prior to the date of the franchise, contemporaneously with the franchise, or subsequent to the date of the franchise.
    Sec. 3.  NEW SECTION.  322A.18  Duty of good faith.

   A franchise imposes on the parties a duty of good faith in performance and enforcement of the franchise agreement. “Good faith” means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.
    Sec. 4.  NEW SECTION.  322A.19  Jurisdiction.
   1.  A condition, stipulation, or provision in a franchise restricting jurisdiction to a forum outside this state is void.
   2.  A condition, stipulation, or provision in a franchise providing that the franchisee consents to the jurisdiction of a forum outside this state is void.
   3.  A civil action or proceeding arising out of a franchise may be commenced wherever jurisdiction over the parties or subject matter exists, even if the franchise limits actions or proceedings to a designated jurisdiction.
    Sec. 5.  NEW SECTION.  322A.20  Choice of law.
   1.  A condition, stipulation, or provision in a franchise requiring the application of the law of another state in lieu of this chapter is void.
   2.  A condition, stipulation, or provision in a franchise that the franchise is to be governed by or construed in accordance with the law of another state is void.
    Sec. 6.  NEW SECTION.  322A.21  Waivers void.

   A condition, stipulation, or provision in a franchise requiring a franchisee to waive compliance with or relieving a person of a duty or liability imposed by or a right provided by this chapter or order under this chapter is void. This section shall not affect the settlement of disputes, claims, or civil lawsuits arising or brought pursuant to this chapter.
    Sec. 7.  NEW SECTION.  322A.22  Other line-makes.

   A condition, stipulation, or provision in a franchise prohibiting or restricting the franchisee from continuing another line-make at the dealership or adding an additional line-make to the dealership is void.
    Sec. 8.  NEW SECTION.  322A.23  Customer lists.

   A condition, stipulation, or provision in a franchise which requires the franchisee to provide its customer lists or service files to the franchiser is void. This section shall not apply to notification by the franchisee to the franchiser of the delivery of a new motor vehicle to a customer or to the submission to the franchiser of a claim for warranty parts, recalls, repairs, or services supplied or performed by the franchisee.
    Sec. 9.  NEW SECTION.  322A.24  Construction.

   This chapter shall be liberally construed to effectuate its purposes.
EXPLANATION
   This bill modifies existing provisions and adds several new provisions to Code chapter 322A, which regulates motor vehicle franchises. The new provisions are similar to current provisions in Code chapter 523H and Code section 537A.10 which govern general franchises operating or granted within the state and which are expressly not applicable to motor vehicle franchises under Code chapter 322A.
   The bill expands the definition of a franchise beyond a contract meeting certain conditions specified in the chapter to include a separate agreement relating to the franchise, entered into prior to, contemporaneously with, or subsequent to the contract date.
   The bill imposes on the parties to the franchise a duty of good faith in performance and enforcement of the franchise. The bill addresses franchise jurisdiction, providing that a condition, stipulation, or provision in a franchise restricting jurisdiction to a forum outside this state, or providing that the franchisee consents to the jurisdiction of a forum outside this state, is void. The bill provides that a civil action or proceeding arising out of a franchise may be commenced wherever jurisdiction over the parties or subject matter exists, even if the franchise limits actions or proceedings to a designated jurisdiction. Further, the bill states that a condition, stipulation, or provision in a franchise requiring the application of the law of another state in lieu of Code chapter 322A, or a condition, stipulation, or provision in a franchise that the franchise is to be governed by or construed in accordance with the law of another state, is void.
   The bill additionally provides that a condition, stipulation, or provision in a franchise requiring a franchisee to waive compliance with or relieving a person of a duty or liability imposed by or a right provided by Code chapter 322A is void, but that this shall not affect the settlement of disputes, claims, or civil lawsuits arising or brought pursuant to the Code chapter. Also void would be a provision, stipulation, or provision in a franchise prohibiting or restricting the franchisee from continuing another line-make at a dealership or adding an additional line-make to a dealership, and requiring a franchisee to provide its customer lists or service files to a franchiser. The bill states that this is not applicable to notification by the franchisee to the franchiser of the delivery of a new motor vehicle to a customer or to the submission to the franchiser of a claim for warranty parts, recalls, repairs, or services supplied or performed by the franchisee.
   The bill states that Code chapter 322A is to be liberally construed to effectuate its purposes.