An Act To Protect Maine Citizens and Franchised New Motor Vehicle Dealers
Maine Legislature, Session 124, LD 1337
Committee: Business, Research and Economic Development
Sponsors: SULLIVAN, COURTNEY, DAMON, HOBBINS, MARRACHE, PERRY, RECTOR, SCHNEIDER, CLEARY, COHEN, KNIGHT, MARTIN, MAZUREK, PRESCOTT, TARDY, WRIGHT
Amends: 10 MRSA §1171, 10 MRSA §1174

Legislative Document 
No. 1337 
S.P.483 
In Senate, March 31, 2009 
An Act To Protect Maine Citizens and Franchised New Motor 
Vehicle Dealers 
(EMERGENCY) 
Reference to the Committee on Business, Research and Economic Development suggested 
and ordered printed. 
Presented by Senator SULLIVAN of Y orIe. 
9tf)CJ~ 
JOY J. O'BRIEN 
Secretary ofthe Senate 
Cosponsored by Senators: COURTNEY of York, DAMON of Hancock, HOBBINS of York, 
MARRACHE of Kennebec, PERRY of Penobscot, RECTOR of Knox, SCHNEIDER of 
Penobscot, Representatives: CLEARY of Houlton, COHEN of Portland, KNIGHT of 
Livermore Falls, MacDONALD of Boothbay, MARTIN of Eagle Lake, MAZUREK of 
Rockland, PRESCOTT of Topsham, TARDY of Newport, WRIGHT of Berwick. 
Printed on recycled paper 
Emergency preamble. Whereas, acts and resolves of the Legislature do not. 
become effective until 90 days after adjournment unless enacted as emergencies; and 
Whereas, Maine has regulated the terms of franchise agreements between 
franchised new motor vehicle dealers and their manufacturers for decades; and 
Whereas, the manufacture, distribution and sale of motor vehicles in this State and 
the ability of franchised new motor vehicle dealers to provide for the distribution, sale 
and repair of vehicles vitally affect the general economy of the State, the transportation 
system and the public interest and public welfare; and 
Whereas, recent economic circumstances have created a crisis in the automobile 
industry, most particularly among domestic automobile manufacturers; and 
Whereas, manufacturers themselves have contributed to this crisis through suspect 
decision making in recent years in the operation of their businesses; and 
Whereas, the solvency and economic vitality of Maine dealerships are jeopardized 
by both current economic conditions and the decision making of manufacturers; and 
Whereas, Maine new motor vehicle dealerships provide thousands of high-paying 
jobs in Maine; and 
Whereas, revenues crucial to the operation of state and local government, including 
property, excise and income taxes and in excess of 20% of all sales taxes, are collected as 
a result of the sale of motor vehicles; and 
Whereas, in the judgment of the Legislature, these facts create an emergency within 
the meaning of the Constitution of Maine and require the following legislation as 
immediately necessary for the preservation of the public peace, health and safety; now, 
therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 10 MRSA §1171, sub-§9-B is enacted to read: 
9-B. Line make. "Line make" means motor vehicles that are offered for sale, lease 
or distribution under a common name, trademark, service mark or brand name or that are 
substantially similar in their design and specifications or are manufactured in the same 
facility or facilities. 
Sec. 2. 10 MRS A §1174, sub-§3, EiflP, as amended by PL 1997, c. 521, §16, is 
further amended to read: 
P. To terminate, fail to renew or refuse to continue any franchise relationship with a 
licensed new motor vehicle dealer, notwithstanding the terms, provisions or 
conditions of any agreement or franchise or the terms or provisions of any waiver, 
unless good cause exists. Good cause may not be shown or based solely on the desire 
of the manufacturer, distributor, distributor branch or division or officer, agent or 
Page I - 124LRI399(OI)-I 
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other representative thereof for market penetration. 
Good cause exists for the 
purposes of a termination, cancellation, nonrenewal or noncontinuance when: 
(1) There is a failure by the new motor vehicle dealer to comply with a provision 
of the franchise, which provision is both reasonable and of material significance 
to the franchise relationship, as long as compliance on the part of the new motor 
vehicle dealer is reasonably possible and the manufacturer first acquired actual or 
constructive knowledge of the failure not more than 180 days prior to the date on 
which notification is given pursuant to paragraph R. 
When the failure by the new motor vehicle dealer relates to the performance of 
the new motor vehicle dealer in sales or service, the failure of the new motor 
vehicle dealer to effectively carry out the performance provisions of the franchise 
is good cause if: 
(a) 
The new motor vehicle dealer was apprised by the manufacturer in 
writing of that failure; the notification stated that notice was provided of 
failure of performance pursuant to this section; and the new motor vehicle 
dealer was afforded a reasonable opportunity for a period of not less than 6 
months to exert good faith efforts to carry out the performance provisions; 
(b) The failure thereafter continued within the period that began not more 
than 180 days before the date notification of termination, cancellation or 
nonrenewal was given pursuant to paragraph R; and 
(c) 
The new motor vehicle dealer has not substantially complied with 
reasonable performance criteria established by the manufacturer and 
communicated to the dealer; or 
(3) 
The dealer and the manufacturer or distributor agree not to renew the 
franchise, although the dealer is entitled to the protections set forth in paragraph 
S in any termination, whether by the manufacturer, the dealer or the parties in 
unison; ef 
(4) The manufaeturer diseontinues produetion or distribution of the franehise 
pro duet; 
Sec. 3. 10 MRSA §1174, sub-§3, enS, as amended by PL 1997, c. 521, §18, is 
further amended to read: 
S. To cancel, terminate, fail to renew or refuse to continue any franchise relationship 
with a licensed new motor vehicle dealer without providing fair and reasonable 
compensation to the licensed new motor vehicle dealer for: 
(1) All unsold new model motor vehicle inventory of the current and previous 
model year purchased from the manufacturer; 
(2) Supplies and parts purchased from the manufacturer or its approved sources; 
(3) Equipment and furnishings purchased from the manufacturer or its approved 
sources; and 
(4) Special tools purchased from the manufacturer or its approved sources. 
If the involuntary termination, sansellation or nonrene\val is due to a failure of 
perforrnanse of the nevI motor vehie1e dealer in sales or servise and the new motor 
vehicle dealer is leasing the dealership facilities from a lessor other than the 
manufacturer, the manufacturer shall pay the new motor vehicle dealer a sum 
equivalent to the rent for the unexpired term of the lease or one year's rent, whichever 
is le&s greater, or, if the new motor vehicle dealer owns the facilities, the 
manufacturer shall pay the new motor vehicle dealer a sum equivalent to the 
reasonable rental value of the facilities for one year, prorated for each line make at 
the facility based on total sales volume of each line make at the facility for the 
calendar year prior to the involuntary termination, cancellation or nonrenewal. The 
manufacturer shall pay the new motor vehicle dealer the sum equivalent to the rent or 
the reasonable rental value of the facilities when possible within 90 days of the 
effective date of the termination, cancellation or nonrenewal if the new motor vehicle 
dealer has notified the manufacturer of the amount of rent or reasonable rental value 
to which the dealer is entitled. 
The fair and reasonable compensation for the items listed in subparagraphs (1) to (4) 
may in no instance be less than the acquisition price and must be paid by the 
manufacturer when possible within 90 days of the effective date of the termination, 
cancellation or nonrenewal, provided that the new motor vehicle dealer has clear title 
to the inventory and other items and is in a position to convey that title to the 
manufacturer. 
In lieu of any injunctive relief or any other damages, if the manufacturer fails to 
prove there was good cause for the termination, cancellation or nonrenewal, or if the 
manufacturer fails to prove that it acted in good faith, then the manufacturer may pay 
the new motor vehicle dealer fair and reasonable compensation for the value of the 
dealership as an ongoing business; er 
Sec. 4. 10 MRSA §1174, sub-§3, if, as enacted by PL 1997, c. 521, §19, is 
amended to read: 
T. To act as, offer to act as or purport to be a broker; or 
Sec. 5. 10 MRSA §1174, sub-§3, '1JU is enacted to read: 
U. To cancel, terminate, fail to renew or refuse to continue any franchise relationship 
with a licensed new motor vehicle dealer not less than 180 days prior to the effective 
date of such termination, cancellation or nonrenewal that occurs in whole or in part as 
a result of any change in ownership, operation or control of all or any part of the 
business of the manufacturer, whether by sale or transfer of assets, corporate stock or 
other equity interest, assignment, merger, consolidation, combination, joint venture, 
redemption, operation of law or otherwise; or the termination, suspension or cessation 
of a part or all of the business operations of the manufacturer; or discontinuance of 
the sale of the product line or a change in distribution system by the manufacturer, 
whether through a change in distributors or the manufacturer's decision to cease 
conducting business through a distributor altogether. 
In addition to any other payments or requirements in this chapter, if a termination, 
cancellation or nonrenewal was premised in whole or in part upon any of the 
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occurrences set forth in this paragraph, the manufacturer is liable to the licensed new 
motor vehicle dealer in an amount at least equivalent to the fair market value of the 
franchise or the pecuniary loss to the dealer arising from the termination, cancellation 
or nonrenewal of the franchise, whichever is greater. 
(1) If liability is based on the fair market value of the franchise, which must 
include diminution in value of the facilities leased or owned by the dealer as a 
result of the loss of the franchise to operate in the facilities, the fair market value 
must be computed on the date in divisions (a) to (c) that yields the highest fair 
market value: 
(a) 
The date the manufacturer announces the action that results in 
termination, cancellation or nonrenewal; 
(b) The daie ihe aciion thai results in iermination, cancellation or nonrenewal 
first becomes general knowledge; or 
(c) The date 12 months prior to the date on which the notice of termination, 
cancellation or nonrenewal is issued. 
(2) As an alternative to the methodology set forth in subparagraph (1), a licensed 
new motor vehicle dealer may choose to accept the pecuniary loss arising out of a 
termination, cancellation or nonrenewal under this paragraph. This pecuniary 
loss must be established based upon the dealer's reasonable expectation of gain 
for a period of time not to exceed 7 years from the date of notice of termination, 
cancellation or nonrenewal. Pecuniary loss includes diminution in the value of 
the facilities leased or owned by the dealer as a result of the loss of the franchise 
to operate in the facilities. 
If the termination, cancellation or nonrenewal is due to the manufacturer's change in 
distributors, the manufacturer may avoid paying fair market value or pecuniary loss 
to the licensed new motor vehicle dealer if the new distributor or the manufacturer 
offers the dealer a franchise agreement with terms acceptable to the dealer. 
If an entity other than the original manufacturer of a line make becomes the 
manufacturer for the line make and intends to distribute motor vehicles of that line 
make in this State, that entity shall honor the franchise agreements of the original 
manufacturer and its licensed new motor vehicle dealers or offer those dealers a new 
franchise agreement for the line make on substantially similar terms and conditions; 
and 
Emergency clause. 
In view of the emergency cited in the preamble, this 
legislation takes effect when approved. 
SUMMARY 
This bill provides protections to franchised new motor vehicle dealers against losses 
caused by unreasonable terminations by manufacturers.