An Act To Amend the Motor Vehicle Franchise Law
Maine Legislature, Session 121, LD 1294
Committee: Business, Research and Economic Development
Sponsors: LaFOUNTAIN, O'NEIL, BROMLEY, DAGGETT, MAYO, SHOREY, CLOUGH, O'BRIEN, PELLON, SULLIVAN
Amends: 5 MRSA §12004-G, 10 MRSA §1, 10 MRSA §1171, 10 MRSA §1173-A, 10 MRSA §1174, 10 MRSA §1174-C, 10 MRSA §1176, 10 MRSA §1178

Legislative Document 
No. 1294 
S.P.425 
In Senate, March II, 2003 
An Act To Amend the Motor Vehicle Franchise Law 
Reference to the Committee on Business, Research and Economic Development suggested 
and ordered plinted. 
Presented by Senator LaFOUNTAIN of York. 
Cosponsored by Representative O'NEIL of Saco and 
JOY J. O'BRIEN 
Secretary of the Senate 
Senators: BROMLEY of Cumberland, President DAGGETT of Kennebec, MAYO of 
Sagadahoc, SHOREY of Washington, Representatives: CLOUGH of Scarborough, O'BRIEN 
of Augusta, PELLON of Machias, SULLIVAN of Biddeford. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 5 MRSA §12004-G, sub-§6-B is enacted to read: 
6-B. 
Commerce and 
and Trade 
Maine Motor 
Vehicle 
Franchise 
Board 
$lOO/day 
MRSA 
§1l87 
Sec. 2. 10 MRSA c. 204 is amended by repealing the chapter 
headnote and enacting the following in its place: 
CHAPTER 204 
BUSINESS PRACTICES BETWEEN M01'QR 
VEHICLE MANUFACTURERS, DISTRIBUTORS 
AND DEALERS 
SUBCHAPTER 1 
REGULATION OF BUSINESS PRACTICES BETWEEN 
MOTOR VEHICLE MANUFACTURERS, 
DISTRIBUTORS AND DEALERS 
Sec.3. 10 MRSA §1171, sub-§I-C is enacted to read: 
I-C. 
Board. 
"Board" 
means 
the 
Maine 
Motor 
Vehicle 
Franchise Board created pursuant to section 1187. 
Sec. 4. 10 MRSA §1173-A, as enacted by PL 1997, c. 521, §7, 
is repealed. 
Sec. 5. 10 MRSA §1174, sub-§3, 1[B, as amended by PL 1997, c. 
521, §8, is further amended to read: 
B. 
To coerce, or attempt to coerce, a motor vehicle dealer 
to 
enter 
into 
an 
agreement 
with 
that 
manufacturer, 
distributor, distributor branch or division, factory branch 
or division, wholesale branch or division or officer, agent 
or other representative thereof, or to do 
any other act 
prejudicial 
to 
the 
dealer 
by 
threatening 
to 
cancel 
a 
franchise or a contractual agreement existing between that 
manufacturer, distributor, distributor branch or division, 
factory branch or division or wholesale branch or division 
and that dealer or by threatening or attempting to modify a 
franchise during the term of the franchise or upon its 
renewal, 
if the modification substantially and adversely 
affects 
the 
motor 
vehicle dealer's 
rights, 
obligations, 
investment or return on investment, without giving 99 365 
days' 
written notice by certified mail 
of 
the proposed 
Page l-LR1735(1) 
521, 
modification 
to 
the 
motor 
vehicle 
dealer, 
unless 
the 
modification is 
required by 
law 
or 
eeQ~~ board order. 
Within the eQ-eay 365-day notice period, the motor vehicle 
dealer may file with the SQFe~ieF-~e~£~-~~~~~~&&y-waeFe 
~ae-·de-a-le .. £·ship--.i-s--leea~ee board and serve notice upon the 
manufacturer a protest requesting a determination of whether 
there 
is 
good 
cause 
for 
permitting 
the 
proposed 
modification. 
The manufacturer has the burden of proving 
good cause. 
The 
eeQF~ board shall promptly schedule 
a 
hearing and decide the matter within 180 days from the date 
the protest is filed. 
Multiple protests pertaining to the 
same 
proposed 
modification 
must 
be 
consolidated 
for 
hearing. 
The 
proposed modification may not 
take effect 
pending the determination of the matter. 
In determining 
whether 
there is 
good 
cause 
for 
permitting 
a 
proposed 
modification, 
any 
relevant 
factors 
must 
be 
considered, 
including, but not limited to: 
(1) 
The reasons for the proposed modification; 
(2) 
Whether the proposed modification is applied to or 
affects 
all 
motor 
vehicle 
dealers 
in 
a 
nondiscriminatory manner; 
(3) 
Whether 
the proposed modification will have 
a 
substantial and adverse effect upon the motor vehicle 
dealer's investment or return on investment; 
(4) 
Whether the proposed modification is in the public 
interest; 
(5) 
Whether the proposed modification is necessary to 
the orderly and profitable distribution; and 
(6) 
Whether the proposed modification is offset by 
other modifications beneficial to the motor vehicle 
dealer. 
Notice in good faith to a motor 
dealer's 
violation 
of 
the 
terms 
franchise or contractual agreement 
violation of this chapter; 
vehicle dealer of that 
or 
provisions 
of 
the 
does not constitute a 
Sec. 6. 10 MRSA §1174, sub-§3, 11M, as amended by PL 1997, c. 
§14, is further amended to read: 
M. 
To require, coerce or attempt to coerce a franchisee to 
refrain from participation in the management of, investment 
in or the acquisition of any other line of new motor vehicle 
or related products as long as the franchisee maintains a 
reasonable 
line 
of 
credit 
for 
each 
franchise 
and 
the 
franchisee remains in substantial compliance with reasonable 
facili ties requirements of the franchisor. 
The reasonable 
facilities requirements may not include any requirement that 
a 
franchisee establish or maintain exclusive facilities, 
personnel 
or 
display 
space 
wReB--~~-~~~r~~--a~e 
aB~easeBaBle-€eR6Jee~JR~-~~~~-~i~~~~~-aBG-a~e 
Be~----e~Re~w~se----~as~iEiee----By----~easeBaBle----BaS~Bess 
eeBs~ae~a~ieBsT--~Re-~~~-~~~-~aa~-eaFFeB~-eeeBem~e 
eeBa~~~eBs--e~--~easeBaBle--BasiBess--eeBsiae~a~~eHs--~as~iEY 
eHelas~ve-Eaeili~ies-is-eB-~Re-E~aBeRise~; 
Sec. 7. 10 MRSA §1174, sub-§4, ~E, as enacted by PL 1997, c. 
521, §22, is amended to read: 
E. 
To fail to disclose in writing to a purchaser of a new 
motor vehicle before entering into a sales contract that the 
new motor vehicle has been damaged 
and repaired if the 
dealer has knowledge of the damage or repair 
e~ and if the 
damage calculated at the retail cost of repair to the new 
motor vehicle exceeds 
5% 
of the manufacturer's suggested 
retail price, except that a new motor vehicle dealer is not 
required to disclose to a purchaser that any glass, bumpers, 
audio 
system, 
instrument 
panel, 
communication 
system 
or 
tires were damaged at any time if the glass, bumpers, audio 
system, instrument panel, communication system or tires have 
been replaced with original or comparable equipment. 
Sec. 8. 10 MRSA §1174-C, sub-§l, ~A, as amended by PL 1997, c. 
521, §23, is further amended to read: 
A. 
A 
designated 
family 
member 
of 
a 
deceased 
e~-,­
incapacitated or retiring new motor vehicle dealer, which 
family member has been designated under the will of the 
dealer 
or 
in writing 
to 
the 
manufacturer, 
distributor, 
factory 
branch, 
factory 
representative 
or 
importer, 
may 
succeed the dealer in the ownership or operation of the 
dealership 
under 
the 
existing 
franchise 
or 
distribution 
agreement 
if 
the 
designated 
family 
member 
gives 
the 
manufacturer, 
distributor, 
factory 
branch, 
factory 
representative or importer of 
new motor vehicles written 
notice of the intention to succeed to the dealership within 
days of the dealer's death 
e~-,- incapacity or retiremen~ 
and unless there exists good cause for refusal to honor the 
succession on the part of the manufacturer, factory branch, 
factory representative, distributor or importer. 
Sec. 9. 10 MRSA §1176. first~, as amended by 
Pt. 
A, 
§16 and affected by §153 
and Pt. 
C, 
amended to read: 
PL 1995, 
§15, is 
c. 65, 
further 
If a motor vehicle franchisor requires or permits a motor 
vehicle 
franchisee 
to 
perform 
labor 
or 
provide 
parts 
in 
satisfaction of 
a 
warranty 
created 
by 
the 
franchisor, 
the 
franchisor 
shall properly 
and 
promptly fulfill its warranty 
obligations, in the case of motor vehicles over 10,000 pounds 
gross 
vehicle 
weight 
rating, 
shall 
adequately 
and 
fairly 
compensate the franchisee for any parts so provided and, in the 
case of all other motor vehicles, shall reimburse the franchisee 
for any parts so provided at the retail rate customarily charged 
by that franchisee for the 
same parts when not provided in 
satisfaction of 
a 
warranty. 
A franchisor 
may 
not 
otherwise 
recover its costs for reimbursing a franchisee for parts and 
labor pursuant to this section. 
For purposes of this section, 
the retail rate customarily charged by the franchisee for parts 
may be established by submitting to the franchisor 100 seguential 
nonwarranty customer-paid service repair orders or 60 days of 
nonwarranty customer-paid service repair orders. 
whichever is 
less in terms of total cost, covering repairs made no more than 
days 
before 
the 
submission 
and 
declaring 
the 
average 
percentage markup. 
The average percentage markup so declared is 
the retail rate, which goes into effect 30 days following the 
declaration, subject to audit of the submitted repair orders by 
the franchisor and adjustment of the average percentage markup 
based on that audit. 
Only retail sales not involving warranty 
repairs, not involving state inspection, not involving routine 
maintenance such as changing the oil and oil filter and not 
involving 
accessories 
may 
be 
considered 
in 
calculating 
the 
average 
percentage 
markup. 
A franchisor 
may 
not 
reguire 
a 
franchisee 
to establish the average percentage markup 
by 
an 
unduly 
burdensome 
or 
time-consuming 
method 
or 
by 
reguiring 
information 
that 
is 
unduly 
burdensome 
or 
time-consuming 
to 
provide. 
including, 
but 
not 
limited 
to. 
part-by-part 
or 
transaction-by-transaction calculations. 
A franchisee 
may not 
change the average percentage markup more than 2 times in one 
calendar year. 
Further, 
the 
franchisor 
shall 
reimburse 
the 
franchisee 
for 
any 
labor 
so 
performed 
at 
the 
retail 
rate 
customarily charged by that franchisee for the same labor when 
not performed in satisfaction of a warranty; 
~f'e"'iaea--t-Ral; as 
long 
as 
the 
franchisee's 
rate 
for 
labor 
not 
performed 
in 
satisfaction of 
a 
warranty is 
routinely posted 
in 
a 
place 
conspicuous 
to 
its 
service 
customer. 
A 
franchisor 
is 
not 
required to 
pay the price charged by 
the dealer 
to retail 
customers 
for 
parts 
of 
systems, 
appliances, 
furnishings, 
accessories and fixtures of a motor home as defined in Title 
29-A, 
section 101, 
subsection 40 that are designed, 
used and 
maintained primarily for nonvehicular residential purposes. 
Any 
claim made by a franchisee for compensation for parts provided or 
for 
reimbursement 
for 
labor 
performed 
in satisfaction of 
a 
warranty must be paid within 30 days of its approval. All the 
claims must be either approved or disapproved within 30 days 
of their receipt. A claim may be submitted within 180 days after 
the 
performance 
of 
services. 
When 
aSi'--£~€R 
Q 
claim 
is 
disapproved, the franchisee that submitted i~-m~s~ the claim must 
be notified in writing of i~s the claim's disapproval within that 
period, together with the specific reasons for its disapproval. 
Ne 
A franchisor 
may 
not, 
by 
agreement, 
by restriction upon 
reimbursement, 
or otherwise, restrict the nature or extent of 
labor 
performed 
or parts 
provided 
so 
that 
such 
restriction 
impairs the franchisee's ability to satisfy a warranty created by 
the franchisor by performing labor in a professional manner or by 
providing parts required in accordance with generally accepted 
standards. 
Sec. 10. 10 MRSA §1178, sub-§l, as enacted by PL 1975, c. 573, 
is amended to read: 
1. 
Agreements subject to this chapter. Written or oral 
agreements between a manufacturer, wholesaler or distributor with 
a 
motor 
vehicle dealer 
including, 
but 
not 
limited to, 
the 
franchise offering, the franchise agreement, 
sales agreements, 
policies and procedures agreements, bulletins or manuals I 
sales 
of goods, services or advertising, leases or mortgages of real or 
personal property, promises to pay, security interests, pledges, 
insurance 
contracts, 
advertising 
contracts, 
construction 
or 
installation contracts, servicing contracts, and all other such 
agreements in which the manufacturer, wholesaler or distributor 
has any direct or indirect interest, sRall-be are subject to this 
chapter. 
Sec. 11. 10 MRS A c. 204, sub-c. 2 is enacted to read: 
SUBCHAPTER 2 
MAINE MOTOR VEHICLE FRANCHISE BOARD 
§1187. 
Maine Motor Vehicle Franchise Board; established 
The Maine Motor Vehicle Franchise Board, as established in 
Title 5, section 12004-G, subsection 6-B and referred to in this 
chapter 
as 
"the 
board," 
is established for 
the 
purpose 
of 
enforcing the provisions of this chapter. 
1. 
Membership. 
The board consists of 7 members: 
A. 
Six members appointed by the Governor: 
(1) 
Four members who are or have been franchised new 
motor vehicle dealers in the State of Maine; 
(2) 
A member 
who 
is or 
has 
been 
an 
employee 
or 
representative of a franchisor; and 
(3) 
A member of the public: and 
B. 
One member appointed by the Secretary of State who is 
not 
and has 
not been either 
a 
motor vehicle dealer or 
manufacturer representative and who is an attorney employed 
~he Secretary of State and assigned to the Bureau of 
Motor Vehicles. 
2. 
Chair. 
The member appointed by the Secretary of State 
is the chair of the board. 
The chair shall: 
A. 
Act as the presiding officer in all matters that come 
before the board: 
B. 
Make 
preliminary 
rulings 
on 
discovery 
and 
other 
questions; 
C. 
Participate fully in board deliberations; and 
p. 
Vote on the 
mexiJ.;,.lL~L~Q!11--p-laints that come before the 
board only when necessary to break a tie. 
3. 
Terms. 
Appointments to the board are for 5 year terms. 
A member may not serve more than 2 consecutive 5-year terms. 
The 
terms of the initial board members must be staggered, with 2 
members serving a term of 3 years, 2 members serving a term of 4 
years and 2 members serving a term of 5 years. 
The term of the 
member who serves as chair is without limit. 
4. 
Vacancy. 
Any vacancy on the board must be filled by the 
Governor or the Secretary of State by appointment of a person of 
the same category as the board member being replaced to hold 
office for the unexpired term. 
5. 
Compensation. 
vH th the exception of the chair, whose 
posi tion is funded pursuant to section 1187 -A, 
members of the 
board are entitled to a per diem of $100 for each day actually 
engaged in the performance of their duties and may be reimbursed 
for reasonable and necessary expenses incurred in carrying out 
their duties. 
6. 
Rulemaki=n""g'-"._-=T=h=e'-----b"..oard shall 
the provisions of this 
subsection are routine 
chapter 375, subchapter 
section. 
technical 
2-A. 
Rules 
rules 
adopt rules to implement 
adopted pursuant to this 
as defined in Ti tIe 5, 
7. 
Affiliation. 
The 
board 
is 
affiliated 
with 
the 
Department of the Secretary of State, Bureau of Motor Vehicles. 
Sl187-A. 
Fund 
To 
fund the board and to pay the start-up expenses of 
administration 
and 
enforcement 
of 
this 
chapter, 
there 
is 
established the Maine Motor Vehicle Franchise Fund, referred to 
in this section as "the fund." 
The board shall impose an initial 
fee upon each new motor vehicle dealer of $200 for each dealer's 
license held by that dealer and an initial fee of $2,000 for each 
line make of each manufacturer. 
The board shall determine on an 
annual basis whether additional funding is required. 
The board 
shall maintain a fund balance of at least $20,000. 
The fund is administered by the Secretary of State. 
The 
fund 
must 
be 
used 
exclusively 
for 
the 
administration 
and 
operation of the board for 
the enforcement of this chapter. 
Expenses for operation of the board, including the compensation 
for the chair. which must be 1/2 the salary of the Bureau of 
Motor Vehicle's attorney assigned to the board, must be paid by 
the board to the Secretary of State on a quarterly basis. 
Sl188. 
Duties 
The board: 
1. 
Complaints. 
Shall review written complaints filed with 
chapter; 
2. 
Decision. 
Shall issue written decisions and may issue 
orders to a franchisee in violation of this chapter; 
3. 
Penalty. 
May levy a civil penalty pursuant to section 
1171-B, subsection 3; 
4. 
Award costs. 
Shall award costs and attorney's fees 
pursuant to section 1173; 
5. 
Interim order. 
Shall levy a civil penalty pursuant to 
section 1171-B, subsection 3 when a party to a complaint under 
this subchapter is found to have recklessly or knowingly failed, 
neglected or refused to comply with an interim order issued by 
the board; and 
6. 
Procedures. 
May appoint persons to be present at the 
deposition of out-of-state witnesses, 
administer oaths, 
issue 
subpoenas to compel the presence of witnesses or documents and 
authorize stenographic or recorded transcripts of proceedin~ 
Sl188-A. 
Prehearing conference 
'. 
Pr ior to hearing a complaint. but not later than 45 days 
after the filing of the complaint. the board shall require the 
parties to attend a 
prehearing conference with the chair to 
discuss the possibility of settlement. 
If the matter is not 
resolved through the conference, the matter must be placed on the 
board's calendar for hearing. 
Settlement conference discussions 
remain confidential 
and 
may not be disclosed or used as 
an 
admission in any subsequent hearing. 
§1189. 
Hearings 
The board shall hold a hearing on the merits of a complaint 
within 120 days of the filing of the complaint. 
The hearing must 
be 
conducted pursuant to rules established by the board. 
A 
decision must be issued within 30 days of the completion of the 
hearing. 
The board shall determine the location of hearings. 
§1189-A. 
Discovery 
The 
parties 
to 
a 
hearing 
conducted 
pursuant 
to 
this 
subchapter are permitted to conduct and use the same discovery 
procedures as provided in the Maine Rules of Civil Procedure, 
subject to any amendments to the rules as the board might adopt 
to secure that discovery is expedited. 
Compliance 
with 
discovery 
procedures 
authorized 
by 
this 
section and by rule may be enforced by application to the board 
or on the board's own motion. 
§1189-B. 
Appea1 
A party appealing an order of the board to 
Court shall indicate in the appeal whether it is an appeal on 
issues of law or on factual matters. 
1. 
Appea1 as matter of 1aw. 
An order or decision may be 
~led solely on the basis that the board made an error of 
law. 
An 
order or decision appealed may not be set aside or 
vacated except for an error of law. 
Additional evidence may not 
be heard or taken by the Superior Court on an appeal made under 
this section. 
2. 
Appea1 invo1ving factua1 matters. 
A party to a decision 
by the board may appeal to the Superior Court for a hearing on 
the merits of the dispute. 
In any such hearing before the 
Superior Court, all findings of fact of the board are presumed to 
be correct unless rebutted by clear and convincing evidence. 
A copy of the decision, certified as true and accurate by 
the chair must be admitted into evidence 
There is a 
right to trial by jury in 
Superior Court under this section. 
An 
subject to the provisions of section 1173. 
in any appeal hearing. 
any action brought in 
appeal for hearing 
i~ 
SlIgO. 
Statute of limitations 
If a complaint is filed with the board by a person otherwise 
enti tIed to bring a complaint in the courts of the State, then 
the applicable statute of limitations is tolleg and 
a 
civil 
action in a court of competent jurisdiction is barred pending the 
outcome of proceedings before the board. 
SlIgO-A. 
Action filed; court 
An action, filed in a court of competent jurisdiction, that 
gives rise or could give rise to a claim or defense under this 
chapter must be stayeg if, within 60 days after the date of 
filing of the complaint, or service of process, whichever date is 
later, a party to the action files a complaint with the board 
asserting the claims or defenses under this chapter. 
SUMMARY 
This bill amends the laws concerning regulation of business 
practices bet'l'reen motor vehicle manufacturers, distributors and 
dealers. 
The 
bill establishes 
the 
Maine 
Motor 
Vehicle 
Franchise 
Board. 
Motor vehicle dealers and manufacturers engage in complex 
and time-consuming litigation before the courts of the State and 
in hearings before the Secretary of State. 
The board is composed 
of 
members. 
This bill provides 
a 
forum 
for 
the 
prompt 
resolution of such complaints by a board with specific expertise 
in the motor vehicle industry, subject to review by the Superior 
Court, 
and 
when 
requested, 
a 
hearing 
on 
the merits 
of 
the 
dispute. 
In an appeal of an order of the board to the Super ior 
Court, 
the 
findings 
of 
the 
board must 
be 
published to 
the 
Superior Court and the decision of the board admitted as 
an 
exhibit. 
The board is not the exclusive venue for initially bringing 
a complaint, but if any party asserting claims or defenses under 
the Maine Revised Statutes, Title 10, chapter 204 or that could 
be brought under chapter 204 brings a complaint before the board, 
then all other civil actions or administrative actions must be 
tolled pending the outcome of proceedings before the board. 
.. 
The bill repeals 
the 
Main€ 
Revised Statutes, Title 10, 
section l173-A. 
The mediation requirement will not be necessary 
given the alternative dispute resolution procedures now in place 
in the State's civil justice system and the mandatory settlement 
conference proposed.in this bill. 
The bill clarifies that manufacturers 
must 
provide 
one 
year's notice prior to attempting to modify a franchise agreement 
if the attempted modification substantially and adversely affects 
the motor vehicle dealer's rights, obligations, investments or 
returns on investments. 
This clar if ication provides the dealer 
with adequate notice to respond to the proposed modification. 
The bill confirms that the right to succeed to ownership of 
a 
franchise 
by 
family members 
and others 
identified in the 
statute applies to retirement as well as death or disability. 
The bill 
amends 
the 
Maine 
Revised 
Statutes, 
Title 
10, 
section 1178, which is intended to be broadly construed to cover 
all agreements, directives or edicts by a manufacturer .