HF 587 (LSB 2019HV (6) 86)

HOUSE FILE 587

BY  COMMITTEE ON TRANSPORTATION

(SUCCESSOR TO HSB 176)

A BILL FOR

An Act relating to the regulation of agreements between manufacturers or distributors, and dealers relating to the sale of recreational vehicles and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
RECREATIONAL VEHICLE SALES
    Section 1.  NEW SECTION.  322E.1  Definitions.

   When used in this chapter, unless the context otherwise requires:

   1.  “Area of sales responsibility” means the geographical area, agreed to by a dealer and a manufacturer or distributor in a manufacturer and dealer agreement, within which area the dealer has the exclusive right to display and sell the manufacturer’s or distributor’s new recreational vehicles of a particular line-make to a consumer.
   2.  “Consumer” means a person who is offered or purchases a new recreational vehicle in a retail transaction.
   3.  “Dealer” means any person, firm, corporation, or business entity licensed or required to be licensed as a motor vehicle dealer pursuant to chapter 322 or as a travel trailer dealer pursuant to chapter 322C.
   4.  “Distributor” means any person, firm, corporation, or business entity that purchases new recreational vehicles for resale to a dealer.
   5.  “Factory campaign” means an effort on the part of a warrantor to contact a recreational vehicle owner or dealer in order to address a part or equipment issue.
   6.  “Family member” means a person who is the spouse, child, grandchild, parent, sibling, niece, or nephew of a recreational vehicle owner or the spouse of such a person.
   7.  “Fifth-wheel trailer” means the same as fifth-wheel travel trailer defined in section 321.1.
   8.  “Folding camping trailer” means a vehicle mounted on wheels and constructed with collapsible partial side walls that fold for towing by another vehicle and unfold to provide temporary living quarters for recreational, camping, or travel use.
   9.  “Line-make” means a specific series of recreational vehicles that include all of the following:
   a.  Are identified by a common series trade name or trademark.
   b.  Are targeted to a particular market segment, as determined by the recreational vehicle’s decor, features, equipment, size, weight, and price range.
   c.  Have lengths and interior floor plans that distinguish the recreational vehicle from other recreational vehicles with substantially the same decor, features, equipment, size, weight, and price range.
   d.  Belong to a single, distinct classification of recreational vehicle product type having a substantial degree of commonality in the construction of the chassis, frame, and body, and in price range.
   e.  Are authorized for sale by a dealer pursuant to a manufacturer and dealer agreement.
   10.  “Manufacturer” means any person, firm, corporation, or business entity that engages in the manufacturing of recreational vehicles.
   11.  “Manufacturer and dealer agreement” means a written agreement or contract entered into between a manufacturer or distributor and a dealer that fixes the rights and responsibilities of the parties and pursuant to which the dealer sells new recreational vehicles.
   12.  “Motor home” means the same as defined in section 321.1.
   13.  “Park model recreational vehicle” means a vehicle that is all of the following:
   a.  Designed and marketed primarily as temporary living quarters for recreational, camping, travel, or seasonal use.
   b.  Built on a single chassis mounted on wheels.
   c.  Has a gross trailer area not exceeding four hundred square feet in the set-up mode, and if less than three hundred twenty square feet in the set-up mode would require a special movement permit for highway transit.
   d.  Certified by the manufacturer as complying with the American national standards institute A119.5 park model recreational vehicle standard.
   14.  “Proprietary part” means any part manufactured by or for and sold exclusively by a manufacturer.
   15.  “Recreational vehicle” means a vehicle which is either self-propelled or towed by a consumer-owned vehicle, primarily designed to provide temporary living quarters for recreational, camping, or travel use that complies with all applicable federal vehicle regulations.“Recreational vehicle” includes a “motor home” and a “travel trailer”.
   16.  “Supplier” means any person, firm, corporation, or business entity that engages in the manufacture of recreational vehicle parts, accessories, or components.
   17.  “Transient consumer” means a consumer who is temporarily traveling through a dealer’s area of sales responsibility.
   18.  “Travel trailer” means the same as defined in section 321.1. “Travel trailer” includes a fifth-wheel trailer, folding camping trailer, and a park model recreational vehicle, but does not include a vehicle that is so designed as to permit it to be towed exclusively by a motorcycle.
   19.  “Warrantor” means any person, firm, corporation, or business entity, including any manufacturer or supplier, that provides a written warranty to a consumer in connection with a new recreational vehicle or a part, accessory, or component of a new recreational vehicle. “Warrantor” does not include a dealer, supplier, or other person, firm, corporation, or business entity not controlled by a manufacturer that provides a service contract, mechanical or other insurance, or extended warranties sold for separate consideration to a consumer.
    Sec. 2.  NEW SECTION.  322E.2  Manufacturer and dealer agreements —— area of sales responsibility.
   1.  A manufacturer or distributor shall not sell a new recreational vehicle in this state to or through a dealer without first entering into a written manufacturer and dealer agreement with the dealer that has been signed by both parties. A dealer shall not sell a new recreational vehicle in this state without first entering into a written manufacturer and dealer agreement with a manufacturer or distributor that has been signed by both parties. 
   2.  A manufacturer and dealer agreement shall designate the area of sales responsibility exclusively assigned to a dealer by the manufacturer or distributor and the manufacturer or distributor shall not change that area or contract with another dealer for sale of the same line-make in the designated area for the duration of the agreement.
   3.  The area of sales responsibility designated in a manufacturer and dealer agreement shall not be reviewed or changed until at least one year after execution of the agreement without the consent of both parties to the agreement.
    Sec. 3.  NEW SECTION.  322E.3  Manufacturer and dealer agreements —— termination, cancellation, nonrenewal, and alteration.
   1.  Termination by manufacturer or distributor.
   a.  A manufacturer or distributor, directly or through any authorized officer, agent, or employee, may terminate, cancel, or fail to renew a manufacturer and dealer agreement with good cause.
   b.  If the manufacturer or distributor terminates, cancels, or fails to renew a manufacturer and dealer agreement with good cause, the manufacturer or distributor is not required to comply with the provisions of section 322E.4.
   c.  The manufacturer or distributor has the burden of showing good cause for terminating, canceling, or failing to renew a manufacturer and dealer agreement. For purposes of determining whether good cause exists for such termination, cancellation, or nonrenewal of the agreement, any of the following factors may be considered:
   (1)  The extent of the affected dealer’s penetration in the area of sales responsibility.
   (2)  The nature and extent of the dealer’s investment in the dealer’s business.
   (3)  The adequacy of the dealer’s service facilities, equipment, parts, supplies, and personnel.
   (4)  The effect of the proposed termination, cancellation, or nonrenewal of the agreement on the community.
   (5)  The extent and quality of the dealer’s service under the warranties of the recreational vehicles sold.
   (6)  The dealer’s failure to follow agreed upon procedures or standards related to the overall operation of the dealership.
   (7)  The dealer’s performance under the terms of the manufacturer and dealer agreement.
   d.  (1)  Except as otherwise provided in this paragraph “d”, a manufacturer or distributor shall provide a dealer with at least ninety days’ prior written notice of termination, cancellation, or nonrenewal of the manufacturer and dealer agreement.
   (2)  (a)  The notice shall state all of the reasons for the termination, cancellation, or nonrenewal and shall further state that if, within thirty days following receipt of the notice, the dealer provides to the manufacturer or distributor a written notice of intent to cure all claimed deficiencies, the dealer shall then have ninety days following receipt of the notice to cure the deficiencies. If the dealer fails to provide notice of intent to cure the deficiencies within thirty days following receipt of the notice, the termination, cancellation, or nonrenewal of the agreement for good cause takes effect thirty days following the dealer’s receipt of the notice.
   (b)  If the dealer provides notice of intent to cure the deficiencies stated and the deficiencies are cured by the dealer within ninety days following receipt of the notice, the manufacturer’s or distributor’s notice to the dealer is voided. If the dealer provides notice of intent to cure the deficiencies stated and fails to cure the deficiencies within ninety days following receipt of the notice, the termination, cancellation, or nonrenewal of the agreement for good cause takes effect ninety days following the dealer’s receipt of the notice. 
   e.  Notwithstanding paragraph “d”, the notice period for termination, cancellation, or nonrenewal of a manufacturer and dealer agreement for good cause may be reduced to thirty days if the grounds for such termination, cancellation, or nonrenewal are due to any of the following factors:
   (1)  The dealer or one of the dealer’s owners has been convicted of or has entered a plea of nolo contendere to a felony.
   (2)  The dealer has abandoned or closed the dealer’s business operations for ten consecutive business days, unless the closing is due to an act of God, a strike, a labor difficulty, or other cause over which the dealer has no control.
   (3)  The dealer has made a significant misrepresentation that materially affects the business relationship of the manufacturer or distributor and the dealer.
   (4)  The dealer’s license has been suspended, revoked, denied, or not renewed.
   (5)  The dealer has committed a material violation of this chapter which is not cured within thirty days after receipt of written notice of the violation.
   f.  Notwithstanding paragraphs “d” and “e”, the manufacturer and dealer agreement may be terminated, canceled, or nonrenewed for good cause at any time if the reason for the termination, cancellation, or nonrenewal is the dealer’s insolvency, the dealer’s declaration of an assignment for the benefit of creditors, or the dealer’s declaration of bankruptcy.
   2.  Termination by dealer.
   a.  A dealer may terminate, cancel, or fail to renew a manufacturer and dealer agreement with good cause.
   b.  If the dealer terminates, cancels, or fails to renew a manufacturer and dealer agreement with good cause, the manufacturer is required to comply with the provisions of section 322E.4.
   c.  (1)  Except as otherwise provided in this paragraph “c”, a dealer shall provide a manufacturer or distributor with at least ninety days’ notice of termination, cancellation, or nonrenewal of the manufacturer and dealer agreement.
   (2)  (a)  The dealer has the burden of showing good cause and the notice shall state all of the reasons for the proposed termination, cancellation, or nonrenewal. The notice shall further state that if, within thirty days following receipt of the notice, the manufacturer or distributor provides to the dealer a written notice of intent to cure all claimed deficiencies, the manufacturer or distributor shall then have ninety days following receipt of the notice to cure the deficiencies. If the manufacturer or distributor fails to provide notice of intent to cure the deficiencies to the dealer within thirty days following receipt of the notice, the termination, cancellation, or nonrenewal of the agreement for good cause takes effect thirty days following the manufacturer’s or distributor’s receipt of the notice.
   (b)  If the deficiencies stated in the notice are cured by the manufacturer or distributor within ninety days following receipt of the notice, the dealer’s notice to the manufacturer or distributor is voided. If the manufacturer or distributor provides notice of intent to cure the deficiencies stated and fails to cure the deficiencies within ninety days following receipt of the notice, the termination, cancellation, or nonrenewal of the agreement for good cause takes effect ninety days following the manufacturer’s or distributor’s receipt of the notice.
   d.  Notwithstanding paragraph “c”, the notice period for termination, cancellation, or nonrenewal of a manufacturer and dealer agreement by a dealer may be reduced to thirty days if there is good cause for such termination, cancellation, or nonrenewal due to any of the following factors:
   (1)  The manufacturer or distributor has been convicted of or has entered a plea of nolo contendere to a felony.
   (2)  The business operations of the manufacturer or distributor have been abandoned or closed for ten consecutive business days, unless the closing is due to an act of God, a strike, a labor difficulty, or other cause over which the manufacturer or distributor has no control.
   (3)  The manufacturer or distributor has made a significant misrepresentation that materially affects the business relationship of the manufacturer or distributor and the dealer.
   (4)  The manufacturer or distributor has committed a material violation of this chapter which is not cured within thirty days after receipt of written notice of the violation.
   (5)  The manufacturer or distributor has declared bankruptcy or insolvency, or an assignment for the benefit of creditors or bankruptcy has occurred.
    Sec. 4.  NEW SECTION.  322E.4  Repurchase or sale of inventory.
   1.  If the dealer terminates, cancels, or does not renew the manufacturer and dealer agreement with good cause as provided in section 322E.3, subsection 2, and the manufacturer or distributor fails to provide notice of intent to cure the claimed deficiencies or fails to cure the claimed deficiencies as provided in section 322E.3, subsection 2, the manufacturer or distributor shall, at the dealer’s option, and within forty-five days after termination, cancellation, or nonrenewal of the agreement, repurchase all of the following:
   a.  (1)  All new, untitled recreational vehicles that were acquired from the manufacturer or distributor within twelve months prior to the effective date of the notice of termination, cancellation, or nonrenewal of the agreement, that have not been used except for demonstration purposes, and that have not been altered or damaged, at one hundred percent of the net invoice cost, including transportation, less applicable rebates and discounts to the dealer.
   (2)  In the event that any of the recreational vehicles repurchased pursuant to this paragraph “a” are damaged, but do not trigger a consumer disclosure requirement, the amount due to the dealer shall be reduced by the cost to repair the vehicle. Damage incurred prior to delivery to the dealer that was disclosed at the time of delivery does not disqualify repurchase pursuant to this paragraph “a”.
   b.  All undamaged accessories and proprietary parts sold to the dealer for resale within twelve months prior to the effective date of termination, cancellation, or nonrenewal of the agreement, if accompanied by the original invoice, at one hundred five percent of the original net price paid to the manufacturer or distributor, to compensate the dealer for the cost of handling, packing, and shipping the parts for return to the manufacturer or distributor.
   c.  All properly functioning diagnostic equipment, special tools, current signage, or other equipment and machinery that was purchased by the dealer upon the request of the manufacturer or distributor within five years prior to the effective date of the termination, cancellation, or nonrenewal of the agreement, and that can no longer be used in the normal course of the dealer’s ongoing business.
   2.  If recreational vehicles of a particular line-make are not returned or required to be returned by the dealer to the manufacturer or distributor pursuant to the terminated, canceled, or nonrenewed manufacturer and dealer agreement, the dealer may continue to sell all line-makes that were subject to the agreement and are currently in stock until those line-makes are no longer in the dealer’s inventory.
    Sec. 5.  NEW SECTION.  322E.5  Transfer of ownership —— family succession —— objections.
   1.  a.  If a dealer desires to make a change in ownership of a dealership by sale of the business assets, a stock transfer, or otherwise, the dealer shall give the manufacturer or distributor that is a party to a manufacturer and dealer agreement written notice of the proposed change at least fifteen business days before the change is effective, including all supporting documentation as may be reasonably required by the manufacturer or distributor to determine whether to make an objection to the sale, transfer, or other change in ownership. In the absence of a breach by the dealer of the manufacturer and dealer agreement or a violation of this chapter, the manufacturer or distributor shall not object to the proposed change in ownership unless the objection to the prospective transferee is due to any of the following factors:
   (1)  The transferee has previously been a party to a manufacturer and dealer agreement with the manufacturer or distributor that was terminated, canceled, or nonrenewed by the manufacturer or distributor for good cause.
   (2)  The transferee has been convicted of a felony or any crime of fraud, deceit, or moral turpitude.
   (3)  The transferee lacks any license required by law.
   (4)  The transferee does not have an active line of credit sufficient to purchase the manufacturer’s or distributor’s products.
   (5)  The transferee has undergone bankruptcy, insolvency, a general assignment for the benefit of creditors, or the appointment of a receiver, trustee, or conservator to take possession of the transferee’s business or property within the previous ten years.
   b.  If a manufacturer or distributor objects to a proposed change in ownership of a dealership, the manufacturer or distributor shall give written notice of its reasons for the objection to the dealer within ten business days after receipt of the dealer’s notification and supporting documentation of the proposed change. The manufacturer or distributor has the burden of proof to show that its objection complies with the requirements of this subsection. If the manufacturer or distributor does not give the dealer timely notice of its objection, the proposed change in ownership of the dealership shall be deemed approved.
   2.  a.  It is unlawful for a manufacturer or distributor to fail to provide a dealer with the opportunity to designate, in writing, a family member as a successor to ownership of the dealership in the event of the death, incapacity, or retirement of the dealer. If a dealer desires to designate a family member as a successor to a dealership, the dealer shall give the manufacturer or distributor that is a party to the manufacturer and dealer agreement with the dealer written notice of the proposed designation or modification of a previous designation at least fifteen business days before the designation or proposed modification of a designation is effective, including all supporting documentation as may be reasonably required by the manufacturer or distributor to determine whether to make an objection to the succession plan. In the absence of a breach by the dealer of the manufacturer and dealer agreement or a violation of this chapter, the manufacturer or distributor shall not object to the designated successor unless the objection is due to any of the following factors:
   (1)  The designated successor has previously been a party to a manufacturer and dealer agreement with the manufacturer or distributor that was terminated, canceled, or nonrenewed by the manufacturer or distributor for good cause.
   (2)  The designated successor has been convicted of a felony or any crime of fraud, deceit, or moral turpitude.
   (3)  The designated successor lacks any license required by law at the time of succession.
   (4)  The designated successor does not have an active line of credit sufficient to purchase the manufacturer’s or distributor’s products at the time of succession.
   (5)  The designated successor has undergone bankruptcy, insolvency, a general assignment for the benefit of creditors, or the appointment of a receiver, trustee, or conservator to take possession of the designated successor’s business or property within the previous ten years.
   b.  It is unlawful for a manufacturer or distributor to prevent or refuse to honor the succession of a designated family member to ownership of a dealership when the dealer is deceased, incapacitated, or has retired, unless the manufacturer or distributor has provided to the dealer written notice of the manufacturer’s or distributor’s objections to the succession within ten days after receipt of the dealer’s designation of a successor or modification of the dealer’s succession plan. If a manufacturer or distributor objects to the proposed succession of a designated family member of the dealer to the dealership, the manufacturer or distributor shall give written notice of its reasons for the objection to the dealer within ten business days after receipt of the dealer’s notification and supporting documentation of the proposed succession or modification of the succession plan. The manufacturer or distributor has the burden of proof to show that the objection complies with the requirements of this subsection. If the manufacturer or distributor does not give the dealer timely notice of its objection, the proposed succession plan for ownership of the dealership shall be deemed approved. However, a family member of the dealer may not succeed to ownership of the dealership if the succession involves, without the manufacturer’s or distributor’s consent, a relocation of the dealership or alteration of the terms and conditions of the manufacturer and dealer agreement.
    Sec. 6.  NEW SECTION.  322E.6  Warranty obligations.
   1.  A warrantor shall do all of the following:
   a.  Specify in writing to each dealer what obligations the dealer has, if any, for preparation and delivery of, and warranty services on, the warrantor’s products.
   b.  Compensate the dealer for warranty services required of the dealer by the warrantor.
   c.  Provide the dealer with a schedule of compensation and time allowances for the performance of warranty services. The schedule of compensation shall include reasonable compensation for diagnostic services performed as well as warranty services.
   2.  Time allowances for the diagnosis and performance of warranty services shall be reasonable for the service to be performed. In determining what constitutes reasonable compensation under this section, the principle factors to be given consideration are the actual wage rates being paid by the dealer and the actual retail wage rates being charged by other dealers in the community in which the dealer is doing business. The compensation of a dealer for warranty services shall not be less than the lowest actual retail wage rates charged by the dealer for like nonwarranty services as long as such actual wage rates are reasonable.
   3.  A warrantor shall reimburse a dealer for any warranty part, accessory, or complete component at actual wholesale cost plus a minimum of a thirty percent handling charge, up to a maximum of one hundred fifty dollars and the cost, if any, of freight to return such part, component, or accessory to the warrantor.
   4.  Warranty audits of dealer records may be conducted by a warrantor within twelve months from the payment of a warranty claim, and dealer claims for warranty compensation shall not be denied except for cause, such as performance of nonwarranty repairs, material noncompliance with the warrantor’s published policies and procedures, lack of material documentation, fraud, or misrepresentation.
   5.  A dealer shall submit claims for compensation for the performance of warranty services to the warrantor within forty-five days after completion of the warranty services.
   6.  A dealer shall immediately notify a warrantor verbally or in writing if the dealer is unable to perform diagnostic services and warranty services within ten days of receipt of a verbal or written complaint from a consumer.
   7.  A warrantor shall disapprove a claim submitted by a dealer for compensation for the performance of warranty services, in writing, within forty-five days after submission of the claim in the manner and form prescribed by the warrantor. A claim not specifically disapproved as required by this subsection shall be deemed approved and shall be paid within sixty days of submission of the claim.
   8.  A warrantor shall not do any of the following:
   a.  Fail to perform any of the warrantor’s obligations with respect to its warranted products.
   b.  Fail to include, in written notices of a factory campaign to recreational vehicle owners and dealers, the expected date by which necessary parts and equipment, including tires and chassis or chassis parts, will be available to dealers to perform the factory campaign work. The warrantor may ship parts to a dealer to effect factory campaign work, and, if such parts are in excess of the dealer’s requirements, the dealer may return unused, undamaged parts to the warrantor for credit after completion of the factory campaign.
   c.  Fail to compensate the warrantor’s dealers for authorized repairs effected by the dealer on merchandise damaged in manufacture or in transit to the dealer by a carrier designated by the warrantor, factory branch, distributor, or distributor branch.
   d.  Fail to compensate the warrantor’s dealers in accordance with the schedule of compensation provided to the dealer pursuant to this section if the warranty services for which compensation is claimed are performed in a timely and competent manner as required in this section.
   e.  Intentionally misrepresent in any way to consumers that warranties with respect to the manufacture, performance, or design of recreational vehicles are made by the dealer as warrantor or co-warrantor.
   f.  Require the warrantor’s dealers to make warranties to a consumer that are in any manner related to the manufacture of the recreational vehicle.
   9.  A dealer shall not do any of the following:
   a.  Fail to perform predelivery inspection functions in a competent and timely manner, as specified by the warrantor.
   b.  Fail to perform warranty services authorized by the warrantor in a competent and timely manner on any transient consumer’s recreational vehicle of a line-make sold or serviced by that dealer.
   c.  Fail to accurately document the time spent completing each repair, the total number of repair attempts conducted on a single unit, and the number of repair attempts for the same repair conducted on a single recreational vehicle.
   d.  Fail to notify the warrantor within ten days of a second repair attempt on a recreational vehicle which impairs the use, value, or safety of the vehicle.
   e.  Fail to maintain written records, including a consumer’s signature, regarding the amount of time a unit is stored for the consumer’s convenience during a repair.
   f.  Make fraudulent warranty claims or misrepresent the terms of any warranty.
    Sec. 7.  NEW SECTION.  322E.7  Indemnification.
   1.  a.  Notwithstanding the terms of a manufacturer and dealer agreement, a warrantor shall indemnify and hold harmless the warrantor’s dealer against any losses or damages to the extent that the losses or damages are caused by the negligence or willful misconduct of the warrantor. 
   b.  A dealer shall not be denied indemnification for failure to discover, disclose, or remedy a defect in the design or manufacturing of a new recreational vehicle. A dealer may be denied indemnification if the dealer fails to remedy a known and announced defect in accordance with the written instructions of the warrantor for whom the dealer is obligated to perform warranty services. 
   c.  A dealer shall provide to the warrantor a copy of any pending lawsuit in which allegations are made that are covered by the provisions of this subsection within ten days after receiving notice of such lawsuit. 
   d.  Notwithstanding any provision to the contrary, this subsection continues to apply even after a new recreational vehicle is titled.
   2.  a.  Notwithstanding the terms of a manufacturer and dealer agreement, a dealer shall indemnify and hold harmless the dealer’s warrantor against any losses or damages to the extent that the losses or damages are caused by the negligence or willful misconduct of the dealer.
   b.  A warrantor shall provide to the dealer a copy of any pending lawsuit in which allegations are made that are covered by the provisions of this subsection within ten days after receiving notice of such lawsuit.
   c.  Notwithstanding any provision to the contrary, this subsection continues to apply even after a new recreational vehicle is titled.
    Sec. 8.  NEW SECTION.  322E.8  Inspection and rejection by dealer.
   1.  Whenever a new recreational vehicle is damaged prior to transit or is damaged in transit to the dealer and the carrier or means of transportation has been selected by the manufacturer or distributor, the dealer shall notify the manufacturer or distributor of the damage within the time frame specified in the manufacturer and dealer agreement and shall do either of the following:
   a.  Request from the manufacturer or distributor authorization to replace the components, parts, or accessories damaged or otherwise repair the vehicle to make the vehicle ready for sale.
   b.  Reject the vehicle within the time frame set forth in subsection 4.
   2.  If the manufacturer or distributor refuses to authorize repair of the new recreational vehicle within ten days after receipt of notification, or if the dealer rejects the new recreational vehicle because of damage, ownership of the vehicle shall revert to the manufacturer or distributor.
   3.  The dealer shall exercise due care when in custody of a damaged new recreational vehicle, but the dealer shall have no other obligations, financial or otherwise, with respect to that vehicle following rejection of the vehicle as provided in subsection 4.
   4.  The time frame for inspection and rejection of a damaged new recreational vehicle by a dealer shall be included in the manufacturer and dealer agreement and shall not be less than two business days after the physical delivery of the vehicle to the dealer.
   5.  Any new recreational vehicle that has, at the time of delivery to the dealer, an unreasonable amount of miles on the vehicle’s odometer, as determined by the dealer, may be subject to rejection by the dealer and ownership of the vehicle shall revert to the manufacturer or distributor. In no instance shall a dealer deem an amount less than the distance between the dealer and the manufacturer’s factory or between the dealer and the distributor’s point of distribution, plus one hundred miles, as an unreasonable amount of miles.
    Sec. 9.  NEW SECTION.  322E.8A  Coercion of dealer prohibited.
   1.  A manufacturer or distributor shall not coerce or attempt to coerce a dealer to do any of the following:
   a.  Purchase a product that the dealer did not order.
   b.  Enter into an agreement with the manufacturer or distributor.
   c.  Enter into an agreement that requires the dealer to submit its disputes to binding arbitration or otherwise waive rights or responsibilities provided for under this chapter.
   2.  As used in this section, “coerce” includes but is not limited to doing any of the following:
   a.  Threatening to terminate, cancel, or not renew a manufacturer and dealer agreement without good cause.
   b.  Threatening to withhold product lines the dealer is entitled to purchase pursuant to the manufacturer and dealer agreement.
   c.  Threatening to delay product delivery as an inducement to amending the manufacturer and dealer agreement.
    Sec. 10.  NEW SECTION.  322E.9  Civil actions —— mediation.
   1.  A dealer, manufacturer, distributor, or warrantor injured by another party’s violation of this chapter may bring a civil action in district court to recover actual damages resulting from such violation. Venue for a civil action authorized by this section shall be exclusively in the county in which the dealer’s business is located. In an action involving more than one dealer, venue may be in any county in which any dealer that is a party to the action is located.
   2.  Prior to bringing suit under this section, the party alleging a violation of this chapter may serve a written request for mediation upon the alleged offending party.
   a.  The request for mediation shall be served upon the alleged offending party via certified mail at the address stated in the manufacturer and dealer agreement between the parties.
   b.  The request for mediation shall contain a brief statement of the dispute or violation alleged and relief sought by the party filing the request.
   c.  Within twenty days after service of a request for mediation, the party that was served with the request shall send via certified mail a written response indicating whether the party is willing to mediate the dispute. If both parties agree to mediation, the parties shall mutually select an independent certified mediator and shall meet with that mediator for the purpose of attempting to resolve the dispute or alleged violation. The meeting place for the mediation shall be in this state at a location selected by the mediator. The mediator may extend the date for the meeting for good cause shown by either party or upon stipulation of both parties.
   d.  If the dispute will be mediated, the service of a request for mediation under this section shall toll the time for the filing of any complaint, petition, protest, or other action under this chapter until representatives of both parties have met with the mutually selected mediator for the purpose of attempting to resolve the dispute or alleged violation. If a complaint, petition, protest, or other action has been filed before that meeting, the court shall enter an order suspending any proceeding or action on such complaint, petition, protest, or other action until the mediation meeting has occurred and may, upon written stipulation of all parties to the proceeding or action that they wish to continue mediation under this section, enter an order suspending the proceeding or action for as long a period of time as the court considers appropriate.
   e.  Each party to the mediation shall bear their own costs for attorney fees and shall divide equally among them the cost of the mediator.
   3.  In addition to the remedies provided in this section, and notwithstanding the existence of any additional remedy at law, a manufacturer, distributor, warrantor, or dealer may apply to the district court for the grant, upon a hearing and for cause shown, of a temporary or permanent injunction, or both, restraining any person from acting as a dealer without being properly licensed, from violating or continuing to violate any of the provisions of this chapter, or from failing or refusing to comply with the requirements of this chapter. Such injunction shall be issued without bond. A single act in violation of the provisions of this chapter shall be sufficient cause to authorize the issuance of an injunction pursuant to this subsection.
    Sec. 11.  NEW SECTION.  322E.10  Jurisdiction.
   1.  A condition, stipulation, or provision in a manufacturer and dealer agreement restricting jurisdiction to a forum outside this state is void.
   2.  A condition, stipulation, or provision in a manufacturer and dealer agreement providing that the dealer consents to the jurisdiction of a forum outside this state is void.
   3.  A civil action or proceeding arising out of a manufacturer and dealer agreement may be commenced wherever jurisdiction over the parties or subject matter exists, even if the manufacturer and dealer agreement limits actions or proceedings to a designated jurisdiction.
    Sec. 12.  NEW SECTION.  322E.11  Choice of law.
   1.  A condition, stipulation, or provision in a manufacturer and dealer agreement requiring the application of the law of another state in lieu of this chapter is void.
   2.  A condition, stipulation, or provision in a manufacturer and dealer agreement that the agreement is to be governed by or construed in accordance with the law of another state is void.
    Sec. 13.  NEW SECTION.  322E.12  Waivers void.

   A condition, stipulation, or provision in a manufacturer and dealer agreement requiring a dealer 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, controversies, or civil lawsuits arising or brought pursuant to this chapter by written release or other written document where separate and adequate consideration is offered and accepted.
    Sec. 14.  NEW SECTION.  322E.13  Application of chapter.

   Notwithstanding chapter 322A, a recreational vehicle as defined in this chapter, is not governed by chapter 322A for the sale of a new recreational vehicle through a dealer in this state by a manufacturer or distributor, or pursuant to a manufacturer and dealer agreement regulated by this chapter.
    Sec. 15.  NEW SECTION.  322E.14  Administration of chapter.

   This chapter shall be administered by the director of transportation.

DIVISION II
COORDINATING AMENDMENTS
    Sec. 16.  Section 321.1, subsection 36C, paragraphs b and c, Code 2015, are amended to read as follows:
   b.  “Travel trailer” means a vehicle without motive power used, manufactured, or constructed to permit its use as a conveyance upon the public streets and highways and designed to permit its use as a place of human habitation by one or more persons. The vehicle may be up to eight feet six inches in width and its overall length shall not exceed forty forty-five feet. The vehicle shall be customarily or ordinarily used for vacation or recreational purposes and not used as a place of permanent habitation. If the vehicle is used in this state as a place of human habitation for more than ninety consecutive days in one location it shall be classed as a manufactured or mobile home regardless of the size limitations provided in this paragraph.
   c.  “Fifth-wheel travel trailer” means a type of travel trailer which is towed by a pickup by a connecting device known as a fifth wheel. However, this type of travel trailer may have an overall length which shall not exceed forty forty-five feet.
    Sec. 17.  Section 322.3, subsection 1, Code 2015, is amended to read as follows:
   1.  A person shall not engage in this state in the business of selling at retail new motor vehicles of any make or represent or advertise that the person is engaged or intends to engage in such business in this state unless the person is authorized to do so by a contract in writing with the manufacturer or distributor of such make of new motor vehicles and unless the department has licensed the person as a motor vehicle dealer in this state in motor vehicles of such make and has issued to the person a license in writing as provided in this chapter.  A person shall not engage in this state in the business of selling at retail new motor vehicles that are recreational vehicles as defined in section 322E.1, unless the person is authorized to do so by a manufacturer and dealer agreement as provided in chapter 322E.
    Sec. 18.  Section 322C.2, subsection 4, Code 2015, is amended by striking the subsection and inserting in lieu thereof the following:
   4.  “Fifth-wheel trailer” means the same as defined in section 322E.1.
    Sec. 19.  Section 322C.2, Code 2015, is amended by adding the following new subsections:
   NEW SUBSECTION.  4A.  “Folding camping trailer” means the same as defined in section 322E.1.
   NEW SUBSECTION.  6A.  “Park model recreational vehicle” means the same as defined in section 322E.1.
    Sec. 20.  Section 322C.2, subsection 10, Code 2015, is amended by striking the subsection and inserting in lieu thereof the following:
   10.  “Travel trailer” means the same as defined in section 322E.1.
    Sec. 21.  Section 322C.3, subsection 1, Code 2015, is amended to read as follows:
   1.  A person shall not engage in this state in the business of selling at retail new travel trailers of any make, or represent or advertise that the person is engaged or intends to engage in such business in this state, unless the person is authorized by a contract in writing between that person and the manufacturer or distributor of that make of new travel trailers to sell the trailers in this state as provided in chapter 322E, and unless the department has issued to the person a license as a travel trailer dealer for the same make of travel trailer.
    Sec. 22.  Section 322C.3, subsections 5 and 7, Code 2015, are amended by striking the subsections.
    Sec. 23.  Section 537A.10, subsection 1, paragraph c, subparagraph (3), Code 2015, is amended to read as follows:
   (3)  “Franchise” also does not include any contract under which a petroleum retailer or petroleum distributor is authorized or permitted to occupy leased marketing premises, which premises are to be employed in connection with the sale, consignment, or distribution of motor fuel under a trademark which is owned or controlled by a refiner which is regulated by the federal Petroleum Marketing Practices Act, 15 U.S.C. §2801 et seq. The term “refiner” means any person engaged in the refining of crude oil to produce motor fuel, and includes any affiliate of such person. “Franchise” also does not include a contract entered into by any person regulated under chapter 103A, division IV, or chapter 123, 322, 322A, 322C, 322D, 322E, 322F, 522B, or 543B, or a contract establishing a franchise relationship with respect to the sale of construction equipment, lawn or garden equipment, or real estate.

DIVISION III
APPLICABILITY
    Sec. 24.  APPLICABILITY.  The provisions of this Act apply to manufacturer and dealer agreements that are entered into or renewed on or after July 1, 2016.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill regulates agreements between manufacturers or distributors, and dealers relating to the sale of recreational vehicles and includes coordinating amendments and applicability provisions.
   DIVISION I. New Code chapter 322E regulates manufacturer and dealer agreements fixing the rights and responsibilities of each party pertaining to the sale of new recreational vehicles in the state. A “recreational vehicle” is a vehicle that is either self-propelled or towed by a consumer-owned tow vehicle and is primarily designed to provide temporary living quarters for recreational, camping, or travel use. A “recreational vehicle” includes a “motor home”, and a “travel trailer” such as a fifth-wheel trailer, folding camping trailer, or a park model recreational vehicle.
   A manufacturer or distributor, and a dealer are required to enter into a written manufacturer and dealer agreement before selling new recreational vehicles in the state. The agreement must designate the dealer’s exclusive area of sales responsibility. A manufacturer or distributor, or a dealer may terminate, cancel, or fail to renew the agreement with good cause and the bill specifies notification requirements, what factors may be considered in determining whether good cause exists, and requirements concerning repurchase or sale of remaining inventory of recreational vehicles and outstanding financial obligations between the parties to the agreement. The party that terminates, cancels, or fails to renew the agreement for good cause has the burden of showing cause. 
   The bill requires that a dealer that desires to make a change in ownership of the dealership give notice to the manufacturer or distributor of the proposed change. The manufacturer or distributor is not allowed to object to the proposal unless the objection is due to factors specified in the bill concerning the proposed transferee. The manufacturer must make a written objection and has the burden of proving that the objection complies with the bill’s requirements.
   A manufacturer or distributor is prohibited from failing to provide a dealer with the opportunity to designate a family member as a successor to the dealership in the event of the dealer’s death, incapacity, or retirement so long as the dealer gives written notice of the designation before it takes effect. The manufacturer or distributor cannot object to the designation unless the dealer is in breach of the manufacturer and dealer agreement or in violation of the provisions of new Code chapter 322E or the objection is due to other specified factors. A manufacturer or distributor is prohibited from refusing to honor the succession of the designated family member unless the manufacturer or distributor has provided the dealer with written notice of an objection to the dealer’s designation after receiving notice of the designation.
   In regards to warranty obligations on new recreational vehicles, the bill requires the warrantor, that person providing a written warranty on the vehicles, to specify the dealer’s obligations for preparation, delivery, and warranty services on the warrantor’s products and how the dealer will be compensated for provision of those services. The bill specifies the warrantor’s and dealer’s obligations to each other concerning warranties.
   The bill provides that both the warrantor and the dealer have duties to indemnify and hold each other harmless to the extent that losses or damages are caused by the negligence or willful misconduct of the other. These duties continue even after a new recreational vehicle is titled.
   The bill specifies the rights and obligations of a dealer and a manufacturer or distributor when a new recreational vehicle is damaged in transit. The bill specifies a time frame for a dealer to inspect a delivered vehicle and to either reject or request to repair the damaged vehicle.
   The bill provides that a manufacturer or distributor shall not coerce or attempt to coerce a dealer to purchase a product the dealer did not order, to enter into an agreement with the manufacturer or distributor, or to enter into an agreement with the manufacturer or distributor that requires the dealer to submit disputes to binding arbitration or otherwise waive rights or responsibilities provided for under the bill. The bill specifies some of the activities that could be considered coercion for purposes of the bill.
   A dealer, manufacturer, distributor, or warrantor injured by another party’s violation of the provisions of new Code chapter 322E may bring a civil action in district court to recover actual damages. However, prior to bringing suit, the party alleging the violation may serve a request for mediation upon the alleged offending party. If both parties agree to mediation, the parties mutually select and share the cost of retaining an independent mediator to attempt to resolve the dispute or alleged violation. Service of the mediation request tolls the time for filing any other proceeding or action and the district court is required to suspend any proceeding or action until the mediation meeting occurs. In addition to any other remedy, either party may apply to the district court for a temporary or permanent injunction.
   The bill provides that a manufacturer and dealer agreement cannot restrict jurisdiction over the agreement to a forum outside of this state, cannot provide that the dealer consents to jurisdiction outside of this state, and cannot limit actions or proceedings to a designated jurisdiction.
   The bill provides that a manufacturer and dealer agreement cannot require the application of laws of another state in lieu of this state’s laws or provide that the agreement is to be governed by or construed in accordance with the laws of another state.
   A manufacturer and dealer agreement also cannot require a dealer to waive compliance with, or relieve a person of a duty or liability imposed, or a right provided, under the bill. This provision does not prohibit the settlement of disputes where separate and adequate consideration is given for a waiver or release.
   Notwithstanding Code chapter 322A, relating to motor vehicle franchisers, a recreational vehicle as defined in the bill is not governed by Code chapter 322A for the sale of a new recreational vehicle through a dealer in this state by a manufacturer or distributor, or pursuant to a manufacturer and dealer agreement regulated by the bill’s provisions.
   The bill provides that new Code chapter 322E shall be administered by the director of transportation.
   DIVISION II. Division II of the bill includes coordinating amendments. 
   Code chapter 321 (motor vehicles and law of the road) is amended to provide that travel trailers and fifth-wheel travel trailers shall not exceed 45 feet, instead of 40 feet in length. 
   Code section 322.3(1) is amended to prohibit a person from selling a motor vehicle that also meets the definition of a “recreational vehicle” pursuant to new Code chapter 322E, unless the person is authorized to do so pursuant to a manufacturer and dealer agreement that meets the requirements of new Code chapter 322E.
   Code chapter 322C (travel trailer dealers, manufacturers, and distributors) is amended to include definitions of recreational vehicles that are consistent with the definitions in new Code chapter 322E. Code section 322C.3(1) is amended to provide that the required manufacturer or distributor and dealer agreement must be made in accordance with the provisions of new Code chapter 322E. Code section 322C.3 is amended to strike two provisions concerning manufacturers or distributors, and dealers of travel trailers that are inconsistent with provisions contained in new Code chapter 322E.
   Code section 537A.10(1)(c)(3) is amended to provide that for purposes of construction of contracts, a franchise does not include a contract entered into by a person regulated by new Code chapter 322E.
   DIVISION III. The provisions of the bill apply to manufacturer and dealer agreements pertaining to the sale of new recreational vehicles that are entered into or renewed on or after July 1, 2016.