Senate File 2293 - Reprinted SENATE FILE 2293 BY COMMITTEE ON TRANSPORTATION (SUCCESSOR TO SSB 3170) (As Amended and Passed by the Senate March 6, 2018 ) A BILL FOR An Act relating to motor vehicles, including provisions 1 concerning record retention at established places of 2 business of motor vehicle dealers, electronic titling and 3 registration of motor vehicles, and warranties and recalls 4 of motor vehicle franchises. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 SF 2293 (2) 87 ns/rn/jh

S.F. 2293 Section 1. Section 321.1, subsection 23, Code 2018, is 1 amended to read as follows: 2 23. “Established place of business” means the place actually 3 occupied either continuously or at regular periods by a 4 dealer or manufacturer where the dealer’s or manufacturer’s 5 books and records are kept and a large share of the dealer’s 6 or manufacturer’s business is transacted. If a dealer has 7 designated one established place of business for purposes of 8 keeping all the dealer’s books and records pursuant to section 9 321.63, “established place of business” also includes any place 10 actually occupied either continuously or at regular periods 11 by the dealer where a large share of the dealer’s business is 12 transacted but not where the dealer’s books and records are 13 kept. 14 Sec. 2. Section 321.20, subsections 2 and 4, Code 2018, are 15 amended to read as follows: 16 2. Notwithstanding contrary provisions of this chapter 17 or chapter 326 regarding titling and registration by means 18 other than electronic means, the department shall, by January 19 July 1, 2018 2019 , develop and implement a program to allow 20 for electronic applications, titling, registering, and funds 21 transfers for vehicles subject to registration in order to 22 improve the efficiency and timeliness of the processes and to 23 reduce costs for all parties involved. The program shall also 24 provide for the electronic submission of any statement required 25 by this section , except where prohibited by federal law. 26 4. Notwithstanding this section or any other provision of 27 law to the contrary, if the program required by subsection 28 2 is not implemented by January July 1, 2018 2019 , an owner 29 of a vehicle subject to registration may apply to the county 30 treasurer of a county contiguous to the county designated for 31 the owner under subsection 1 for registration and issuance of 32 a certificate of title. 33 Sec. 3. Section 321.63, Code 2018, is amended to read as 34 follows: 35 -1- SF 2293 (2) 87 ns/rn/jh 1/ 6

S.F. 2293 321.63 Different places of business. 1 1. If a transporter or dealer has an established place of 2 business in more than one city, the transporter or dealer shall 3 secure a separate and distinct certificate of registration and 4 number plates for each such place of business. 5 2. If a dealer has more than one established place of 6 business, the dealer may designate one such location in this 7 state for purposes of keeping all the dealer’s books and 8 records, regardless of the line-make of motor vehicles to 9 which such books and records pertain, by submitting a written 10 certification to the department in a manner approved by the 11 department. 12 Sec. 4. Section 322A.5, Code 2018, is amended to read as 13 follows: 14 322A.5 Warranties and recalls . 15 1. Every franchiser and franchisee shall fulfill the 16 terms of any express or implied warranty concerning the sale 17 of a motor vehicle to the public of the line-make which is 18 the subject of a contract or franchise agreement between the 19 parties. If it is determined by the district court that either 20 the franchiser or franchisee, or both, have violated an express 21 or implied warranty, the court shall add to any award or relief 22 granted an additional award for reasonable attorney fees and 23 other necessary expenses for maintaining the litigation. 24 2. a. A franchiser shall specify in writing to each of 25 the franchiser’s franchisees operating in this state the 26 franchisee’s obligations for preparation, delivery, and 27 warranty services related to the franchiser’s products. The 28 franchiser shall compensate the franchisee for the warranty 29 services the franchiser requires the franchisee to provide, 30 including warranty and recall obligations related to repairing 31 and servicing motor vehicles of the franchiser and all parts 32 and components authorized by the manufacturer to be installed 33 in or manufactured for installation in such motor vehicles. 34 b. The franchiser shall provide to the franchisee a 35 -2- SF 2293 (2) 87 ns/rn/jh 2/ 6

S.F. 2293 schedule of compensation that specifies reasonable compensation 1 the franchiser will pay to the franchisee for such warranty 2 services, including for parts, labor, and diagnostics. 3 (1) In determining the schedule of compensation for parts, 4 the franchiser may multiply the price paid by the franchisee 5 for parts, including all shipping costs and other charges, by 6 the sum of one and the franchisee’s average percentage markup. 7 The franchisee’s average percentage markup is calculated by 8 subtracting one from the result of dividing the total amounts 9 charged by the franchisee for parts used in warranty-like 10 repairs by the total cost to the franchisee for the parts in 11 the retail service orders submitted pursuant to subparagraph 12 (3). 13 (2) In determining the schedule of compensation for 14 labor-related warranty services, the franchiser may calculate 15 the franchisee’s retail labor rate by dividing the total 16 amount of retail sales attributable to labor for warranty-like 17 services by the number of hours of labor spent to generate the 18 retail sales in the retail service orders submitted pursuant to 19 subparagraph (3). 20 (3) (a) The franchisee may establish its average percentage 21 markup for parts or its labor rate by submitting to the 22 franchiser copies of one hundred sequential retail service 23 orders paid by the franchisee’s customers, or all of the 24 franchisee’s retail service orders paid by the franchisee’s 25 customers in a ninety-day period, whichever is less, for 26 services provided within the previous one-hundred-eighty-day 27 period. The franchiser shall not consider retail service 28 orders or portions of retail service orders attributable to 29 routine maintenance such as tire service or oil service. 30 (b) Within thirty days of receiving the franchisee’s 31 submission, the franchiser may choose to audit the submitted 32 orders. The franchiser shall then approve or deny the 33 establishment of the franchisee’s average percentage markup 34 or labor rate. If the franchiser approves the establishment 35 -3- SF 2293 (2) 87 ns/rn/jh 3/ 6

S.F. 2293 of the franchisee’s average percentage markup or labor rate, 1 the markup or rate calculated under this subparagraph shall go 2 into effect forty-five days after the date of the franchiser’s 3 approval. If the franchiser denies the establishment of the 4 franchisee’s average percentage markup or labor rate, the 5 franchisee may file a complaint with the department and a 6 hearing shall be held before the department of inspections 7 and appeals. The franchiser shall have the burden of proof 8 to establish that the franchiser’s denial was reasonable. If 9 the department of inspections and appeals finds the denial 10 was not reasonable, the denial shall be deemed a violation of 11 this chapter and the department of inspections and appeals 12 shall determine the franchisee’s average percentage markup or 13 labor rate for purposes of calculating a reasonable schedule of 14 compensation. In making such a determination, the department 15 of inspections and appeals shall not consider retail service 16 orders or portions of retail service orders attributable to 17 routine maintenance such as tire service or oil service. 18 (c) A franchiser shall not require a franchisee to 19 establish an average percentage markup or labor rate by a 20 methodology, or by requiring the submission of information, 21 that is unduly burdensome or time-consuming to the franchisee, 22 including but not limited to requiring part-by-part or 23 transaction-by-transaction calculations. 24 (d) A franchisee shall not request a change in the 25 franchisee’s average percentage markup or labor rate more than 26 once in any one-year period. 27 (4) The compensation to the franchisee for warranty parts 28 and labor shall not be less than the rates charged by the 29 franchisee for like parts and services to retail customers, 30 provided the rates are reasonable. 31 3. A franchiser shall not do any of the following: 32 a. Fail to perform any warranty obligation. 33 b. Fail to compensate any of the franchiser’s franchisees 34 operating in this state for repairs relating to a recall. 35 -4- SF 2293 (2) 87 ns/rn/jh 4/ 6

S.F. 2293 4. a. A claim made by a franchisee for warranty services 1 pursuant to this section shall be paid within thirty days after 2 the claim’s approval. A franchiser shall either approve or 3 deny a claim within thirty days after the franchiser receives 4 a claim if the claim is submitted on a proper form generally 5 used by the franchiser and the claim contains the information 6 required by the franchiser. If a franchiser does not deny 7 a claim in writing within thirty days after the receipt of 8 the claim, the claim shall be deemed to be approved by the 9 franchiser and payment shall be made to the franchisee within 10 thirty days. 11 b. A franchiser may deny a franchisee’s claim for 12 compensation for warranty or recall services if the 13 franchisee’s claim is based on a repair not related to warranty 14 or recall services, the repair was not properly performed, the 15 franchisee lacks the reasonably required documentation for 16 the claim, the franchisee fails to comply with the terms and 17 conditions of the franchiser’s warranty or recall compensation 18 program, or the franchiser has a bona fide belief based on 19 factual evidence that the franchisee’s claim was submitted 20 containing an intentionally false or fraudulent statement or 21 misrepresentation. A franchiser may reject, but shall not 22 deny, a claim based solely on a franchisee’s unintentional 23 failure to comply with a specific claim processing requirement, 24 such as a clerical error, that does not otherwise affect the 25 legitimacy of the claim. If a claim is rejected for such a 26 failure, the franchisee may resubmit a corrected claim in a 27 timely manner to the franchiser. 28 c. The requirement to approve a claim within thirty days 29 or to pay an approved claim within thirty days as provided in 30 this subsection shall not be construed to preclude denials, 31 reductions, or chargebacks not otherwise prohibited under 32 section 322.3, subsection 13. 33 5. The obligations set forth in this section shall apply to 34 any franchiser as defined in this chapter and any franchiser of 35 -5- SF 2293 (2) 87 ns/rn/jh 5/ 6