KRS § 190.070 — KY Code / Title XVI / Chapter 190 / Section 190.070
190.070 Prohibited practices on the part of a manufacturer, distributor, factory branch, or factory representative
Status: in_force

190.070 Prohibited practices on the part of a manufacturer, distributor, factory

branch, or factory representative.

(1) It shall be a violation of this section for any manufacturer, distributor, factory

branch, or factory representative licensed under this chapter, either directly or

indirectly, to require any new motor vehicle dealer in the Commonwealth:

(a) To order or accept delivery of any motor vehicle, part or accessory thereof,

appliances, equipment, or any other product not required by law, which shall

not have been voluntarily ordered by the new motor vehicle dealer; except

that this section is not intended to modify or supersede any terms or

provisions of the franchise requiring new motor vehicle dealers to market a

representative line of those motor vehicles which the manufacturer or

distributor is publicly advertising;

(b) To order or accept delivery of any new motor vehicle with special features,

appliances, accessories, or equipment not included in the list price of the

motor vehicle, as publicly advertised by the manufacturer or distributor;

(c) To order for any person any parts, accessories, equipment, machinery tools,

appliance, or any commodity whatsoever not required in connection with a

recall campaign;

(d) To participate monetarily in an advertising campaign or contest, any

promotional materials, training materials, showroom or other display

decorations, or materials, at the expense of the dealer, without the consent of

the dealer;

(e) To enter into any agreement with the manufacturer, distributor, factory

branch, or factory representative, or to do any other act prejudicial to the new

motor vehicle dealer by threatening to cancel a franchise or any contractual

agreement existing between the dealer and the manufacturer, distributor,

factory branch, or factory representative. Notice in good faith to any dealer of

the dealer's violation of any terms or provisions of the dealer's franchise, or

contractual agreement shall not constitute a violation of this law;

(f) To change the capital structure of the dealership, or the means by or through

which the dealer finances the operation of the dealership, provided that the

dealership at all times meets any reasonable capital standards agreed to by the

dealer, excluding any entity engaged primarily in providing financing or

insurance on motor vehicles;

(g) To refrain from participation in the management or investment in, or the

acquisition of any other line of new motor vehicle or related products;

provided, however, that this section does not apply unless the new motor

vehicle dealer maintains a reasonable line of credit for each make or line of

new motor vehicles, and that the new motor vehicle dealer remains in

substantial compliance with the terms and conditions of the franchise and with

any reasonable facility requirements of the manufacturer, and no change is

made in the principal management of the new motor vehicle dealership;

(h) To change the location of the dealership or, during the course of the

agreement, make any substantial alterations to the same components of the

dealership premises:

1. Within ten (10) years of a previously required improvement, alteration,

or construction to those same components; or

2. When to do so, would be unreasonable in light of the current economic,

political, and social considerations;

(i) To prospectively assent to a release, assignment, novation, waiver, or estoppel

which would relieve any person from liability to be imposed by this law, or to

require any controversy between a dealer and a manufacturer, distributor, or

representative, to be referred to any person other than the duly constituted

courts of the Commonwealth or the United States of America, or to the

commissioner, if the referral would be binding upon the dealer;

(j) To establish or maintain exclusive facilities, personnel, display space, or

signage for a new motor vehicle make or line; or

(k) To expand facilities without making available a sufficient supply of new

motor vehicles to support the expansion in light of the market and economic

conditions.

(2) It shall be a violation of this section for any manufacturer, distributor, factory

branch, or factory representative, either directly or indirectly:

(a) To delay, refuse, or fail to deliver motor vehicles, or vehicle parts or

accessories in reasonable quantities relative to the new motor vehicle dealer's

facilities and sales potential in the new motor vehicle dealer's relevant market

area, and within a reasonable time, but in any case no more than sixty (60)

days, after receipt of an order from a dealer having a franchise for the retail

sale of any new vehicle sold or distributed by the manufacturer or distributor,

any new vehicle, parts, or accessories to new vehicles as are covered by the

franchise, if the vehicle, parts, or accessories are publicly advertised as being

available for delivery or actually being delivered. The delivery to another

dealer of a motor vehicle of the same model and identically equipped as the

vehicle ordered by a motor vehicle dealer who has not received delivery

thereof, but who had placed his or her written order for the vehicle prior to the

order of the dealer receiving the vehicle, shall be prima facie evidence of a

delayed delivery of, or refusal to deliver, a new motor vehicle to a motor

vehicle dealer within sixty (60) days, without cause. This section is not

violated, however, if the failure is caused by acts or causes beyond the control

of the manufacturer, distributor, factory branch, or factory representative;

(b) To refuse to disclose to any new motor vehicle dealer, handling the same line

make, the manner and mode of distribution of that line make within the

relevant market areas;

(c) To prevent or attempt to prevent a dealer from receiving fair and reasonable

compensation for the value of the franchised business. There shall not be a

transfer or assignment of the dealer's franchise without the consent of the

manufacturer or distributor, which consent shall not be unreasonably

withheld;

(d) To receive money, goods, services, or any other benefit from any vendor on

account of a transaction between the dealer and the vendor with whom the

dealer does business on the recommendation or requirement of the

manufacturer or distributor, other than for compensation for services

rendered, unless the benefit is promptly accounted for, and transmitted to the

dealer, excluding any entity engaged primarily in providing financing or

insurance on motor vehicles;

(e) To increase prices of motor vehicles which the dealer had ordered for private

retail customers prior to the dealer's receipt of the written official price

increase notification, a sales contract signed by a private retail consumer shall

constitute evidence of each order, provided that the vehicle is in fact delivered

to the customer. In the event of manufacturer price reductions, the amount of

a reduction received by a dealer shall be passed on to the private retail

consumer by the dealer, if the retail price was negotiated on the basis of the

previous higher price to the dealer. Price reductions shall apply to all vehicles

in the dealer's inventory which were subject to the price reduction. Price

differences applicable to new model or series motor vehicles at the time of the

introduction of new models or series shall not be considered a price increase

or price decrease. Price changes caused by the following shall not be subject

to the provisions of this section:

1. The addition to a motor vehicle of required or optional equipment

pursuant to state or federal law;

2. Revaluation of the United States dollar, in the case of foreign-make

vehicles or components; or

3. Increased transportation charges due to an increase in the rate charged

by common carrier or transporter;

(f) To offer any refunds or other types of inducements to any person for the

purchase of new motor vehicles of a certain line make to be sold to the state or

any political subdivision thereof, without making the same offer, upon written

request, to all other dealers in the same line make within the relevant market

area;

(g) To release to any outside party, except under subpoena, any administrative,

judicial or arbitration proceedings, or any business, financial, or personal

information which may be, from time to time, provided by the dealer to the

manufacturer, without the express written consent of the dealer;

(h) To deny any dealer the right of free association with any other dealer for any

lawful purpose;

(i) To establish or maintain a relationship, on the part of a manufacturer,

distributor, factory branch, or factory representative, where the voting rights

exceed a simple majority;

(j) To own, operate, or control any motor vehicle dealership in the

Commonwealth; however, this subsection shall not prohibit:

1. The operation by any manufacturer of a dealership for a temporary

period, not to exceed one (1) year, during the transition from one (1)

owner to another;

2. The ownership or control of a dealership by a manufacturer while the

dealership is being sold under a bona fide contract or purchase option to

the operator of the dealership; or

3. The ownership, operation, or control of a dealership by a manufacturer

if the licensor determines after a hearing at the request of any party, that

there is not a dealer who is independent of the manufacturer available in

the community or trade area to own and operate the franchise in a

manner consistent with the public interest;

(k) To compete without good faith with a new motor vehicle dealer in the same

line make, operating under an agreement or franchise from the

aforementioned manufacturer, distributor, factory branch, or factory

representative in the relevant market area. A manufacturer, distributor, factory

branch, or factory representative shall not, however, be deemed to be

competing when operating a dealership, either temporarily for a reasonable

period, not to exceed one (1) year, or in a bona fide retail operation which is

for sale to any qualified independent person at a fair and reasonable price, or

in a bona fide relationship in which an independent person has made a

significant investment, subject to loss in the dealership, and can reasonably

expect to acquire full ownership of such dealership on reasonable terms and

conditions;

(l) To offer to sell or to sell, directly or indirectly, at retail, any new motor

vehicle to a consumer in the Commonwealth, except through a new motor

vehicle dealer holding a franchise for the line make covering the new motor

vehicle. The prohibition in this paragraph shall not apply to manufacturer or

franchisor sales of new motor vehicles to the federal government, charitable

organizations, or fleet customers, but shall apply to any sale of a new motor

vehicle to employees of the manufacturer or franchisor;

(m) To fail to assign any retail vehicle reservation, request to purchase, or lease

received by the manufacturer from a resident of the Commonwealth to the

franchised dealer designated by the customer or, if no designation is made, to

the franchised dealer in the closest proximity to the consumer, and for which

the franchised dealer is otherwise in compliance with the franchise agreement

and authorized to sell the make and model based on applicable standards and

requirements that include but are not limited to any facility, technology, or

training requirements necessary to sell or service the vehicle, so long as the

standards and requirements are compliant with the applicable laws and

regulations. Nothing in this paragraph shall require a manufacturer or

distributer to allocate or supply additional or supplemental inventory to a

franchised dealer located in the Commonwealth in order to satisfy a retail

consumer's reservation or request;

(n) To unfairly discriminate among its new motor vehicle dealers with respect to

warranty reimbursement or authority granted its new motor vehicle dealers to

make warranty adjustment with retail customers;

(o) To fail to give consent to the sale, transfer, or exchange of the franchise to a

qualified buyer capable of being licensed as a new motor vehicle dealer in this

state; provided that consent may be withheld when in light of other

circumstances, granting the consent would be unreasonable; or

(p) To fail to be licensed as provided in this chapter, and to maintain a bond in an

amount as determined by this chapter.

(3) It shall be unlawful for a manufacturer, either directly or indirectly, or in

combination with or through any subsidiary or affiliated entity, to discriminate in

favor of one (1) dealer against another dealer holding a franchise for the same line

make of motor vehicle by furnishing to only one (1) dealer any of the following:

(a) Any vehicle, part, or other product that is not available to each dealer at the

same price, including discounts, rebates, incentives, or other payments or

allowances affecting the net price of the product;

(b) Any vehicle, part, or other product that is not made available to each dealer in

quantities proportionate to the demand for the vehicle, part, or other product;

(c) Any vehicle, part, or other product that is not made available to each dealer on

comparable delivery terms, including time of delivery after placement of an

order;

(d) Any promotional or advertising payment or allowance that is not made

available to each dealer on proportionally equal terms;

(e) Any opportunity to purchase or lease from the manufacturer the dealer's

facility that is not made available to each dealer on terms proportionate to the

respective values of its facilities;

(f) Any personnel training that is not made available to each dealer on

proportionally equal terms;

(g) Any inventory or other financing that is not made available to each dealer on

proportionally equal terms, except that a manufacturer, subsidiary, or

affiliated entity shall not be obligated to make available financing to a dealer

who does not meet reasonable credit standards uniformly applied by the

manufacturer, subsidiary, or affiliated entity;

(h) Any opportunity to perform work for which the dealer is entitled to be

compensated under this chapter that is not made available to each dealer under

uniformly applied standards;

(i) Any opportunity to sell products or services distributed by the manufacturer

for resale in connection with the line make of the motor vehicle covered by

the franchise that is not made available to each dealer on proportionally equal

terms;

(j) Any opportunity to establish an additional sales, service, or parts outlet that is

not made available to each dealer in whose relevant market area the sales,

service, or parts outlet will be located;

(k) Any information concerning the manufacturer's products, prices or other

terms of sale, or promotional programs that is not contemporaneously

furnished to the dealer;

(l) Any improvement to, or payment to the dealer for an improvement to, the

dealer's facilities that is not made available to each dealer on proportionally

equal terms;

(m) Any opportunity to sell or assign retail installment contracts or consumer

leases to the manufacturer or the manufacturer's sales finance company

subsidiary that is not made available to each dealer on proportionally equal

terms, except that a manufacturer or sales finance company shall not be

obligated to purchase any retail installment contract or consumer lease that

does not meet reasonable credit terms uniformly applied by the manufacturer

or sales finance company subsidiary;

(n) Any product assistance, service, or facility in connection with the franchise

that is not made available to each dealer on proportionally equal terms; or

(o) Any payment for any service or facility in connection with the franchise that

is not made available to each dealer on proportionally equal terms.

(4) It shall not be a defense to an alleged violation of subsection (3) of this section, that

an item or opportunity was offered to a dealer if the offer was conditioned upon the

dealer meeting one (1) or more requirements that are not reasonable and necessary

to fulfill the dealer's obligations under the franchise. The manufacturer shall have

the burden of proving that any requirement upon which an offer was conditioned

was reasonable and necessary to fulfill the dealer's obligations under the franchise

when the offer was made. A requirement shall not be found to be reasonable and

necessary to fulfill the dealer's obligations under the franchise if the manufacturer

cannot prove that it was within the control of each dealer to meet the requirement

imposed on the dealer as a condition of the offer.

(5) A dealer who alleges a good-faith belief that the dealer has been, or is being,

discriminated against in violation of subsection (3) of this section, may demand in

writing that the manufacturer furnish the dealer with pertinent information

reasonably necessary for the dealer to determine if discrimination exists. If the

manufacturer fails to furnish the dealer with the information demanded within thirty

(30) days of the manufacturer's receipt of the dealer's written demand, the

manufacturer shall have, in any subsequent legal proceeding, the burden of proving

that the alleged violation has not occurred.

(6) Any dealer who is discriminated against by a manufacturer in violation of

subsection (3) of this section shall recover three (3) times an amount equal to the

value of what the dealer would have received if the manufacturer had complied

with subsection (3) of this section upon furnishing any item or opportunity to

another dealer.

(7) A change in ownership of a manufacturer or distributor that contemplates a

continuation of that line make in the state shall not directly or indirectly, through

actions of any parent of the manufacturer or distributor, subsidiary of the

manufacturer or distributor, or common entity cause a termination, cancellation, or

nonrenewal of a dealer agreement by a present or previous manufacturer or

distributor of an existing agreement unless the manufacturer or distributor offers the

new vehicle dealer an agreement substantially similar to that offered to other

dealers of the same line make.