House File 2197 - Introduced HOUSE FILE 2197 BY COOLING A BILL FOR An Act relating to franchisee compensation and time allowances 1 for motor vehicle warranty services, and including 2 applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5822YH (4) 91 th/ns

H.F. 2197 Section 1. Section 322A.5, subsection 2, paragraph b, Code 1 2026, is amended by striking the paragraph and inserting in 2 lieu thereof the following: 3 b. A franchiser shall pay the franchisee for warranty 4 services, including for parts, labor, and diagnostics, an 5 amount not less than the rates and labor times charged by the 6 franchisee for like parts and services to retail customers, 7 provided the rates and labor times are reasonable. A 8 franchisee shall provide to the franchiser an itemized list of 9 rates and labor times for warranty services performed by the 10 franchisee. 11 Sec. 2. Section 322A.5, subsection 2, paragraph c, Code 12 2026, is amended to read as follows: 13 c. The franchiser shall provide to the franchisee a list of 14 time allowances for the performance of warranty services. Time 15 allowances for the performance of A franchisee shall perform 16 warranty services, including diagnostic services, shall be in a 17 reasonable and adequate for the services to be performed amount 18 of time . 19 Sec. 3. APPLICABILITY. This Act applies to franchises under 20 chapter 322A entered into or renewed on or after the effective 21 date of this Act. 22 EXPLANATION 23 The inclusion of this explanation does not constitute agreement with 24 the explanation’s substance by the members of the general assembly. 25 Under current law, both a franchiser (a manufacturer or 26 distributor of motor vehicles) and franchisee (a person who 27 receives motor vehicles from the franchiser under a contract 28 and who offers and sells such motor vehicles to the general 29 public) are required to fulfill the terms of any express or 30 implied warranty concerning the sale of a motor vehicle to 31 the public. A franchiser must compensate a franchisee for 32 the warranty services the franchiser requires the franchisee 33 to provide. The franchiser is required to provide to the 34 franchisee a schedule of compensation that specifies reasonable 35 -1- LSB 5822YH (4) 91 th/ns 1/ 2

H.F. 2197 compensation the franchiser will pay to the franchisee for such 1 warranty services, including for parts, labor, and diagnostics. 2 The schedule of compensation must provide for the franchisee’s 3 average percentage markup on parts, as calculated by the 4 franchisee, and the franchisee’s retail labor rate, both of 5 which must be approved by the franchiser. The franchiser must 6 pay a franchisee for warranty parts and labor at least the 7 franchisee’s retail rates for like parts and services, if those 8 retail rates are reasonable. The franchiser is required to 9 provide a list of reasonable and adequate time allowances for 10 the performance of warranty services. 11 This bill strikes the requirement for a franchiser to 12 provide a schedule of compensation, and the related schedule 13 provisions, and instead requires a franchiser to pay a 14 franchisee for warranty services, including for parts, labor, 15 and diagnostics, an amount not less than the rates and labor 16 times charged by the franchisee for like parts and services 17 to retail customers, provided the rates and labor times 18 are reasonable. A franchisee is required to provide to the 19 franchiser an itemized list of rates and labor times for 20 warranty services performed by the franchisee. The bill also 21 strikes the requirement for a franchiser to provide a list of 22 time allowances for the performance of warranty services, and 23 instead requires a franchisee to perform warranty services in a 24 reasonable amount of time. 25 The bill applies to franchises under Code chapter 322A 26 entered into or renewed on or after July 1, 2026. 27 -2- LSB 5822YH (4) 91 th/ns 2/ 2