An Act To Amend the Laws Relating to Motor Vehicle Dealers
Maine Legislature, Session 128, LD 1463
Committee: Labor, Commerce, Research and Economic Development
Sponsors: VOLK, HERBIG, JACKSON, THIBODEAU, FREDETTE, VACHON
Amends: 10 MRSA §1174, 10 MRSA §1174-C, 10 MRSA §1176-A

Legislative Document
No. 1463
S.P. 509
In Senate, April 18, 2017
An Act To Amend the Laws Relating to Motor Vehicle Dealers
Reference to the Committee on Labor, Commerce, Research and Economic Development 
suggested and ordered printed.
HEATHER J.R. PRIEST
Secretary of the Senate
Presented by Senator VOLK of Cumberland.
Cosponsored by Representative HERBIG of Belfast and
Senators: JACKSON of Aroostook, President THIBODEAU of Waldo, Representatives: 
FREDETTE of Newport, VACHON of Scarborough.
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  10 MRSA §1174, sub-§3, ¶¶C-2 to C-5 are enacted to read: 
C-2.  To discriminate, directly or indirectly, or to use an unreasonable, arbitrary or 
unfair sales or other performance standard in determining a franchise motor vehicle 
dealer's compliance with a franchise agreement, including but not limited to a 
standard that does not include consideration of factors in the marketplace, including 
but not limited to local brand preferences, local and statewide geographic factors, 
local as well as statewide averages that measure sales and service performance and 
local and statewide variation based on particular market segments, including but not 
limited to pickup trucks, sport utility vehicles and compact, mid-size and full-size 
sedans, the area of responsibility and any changes in the area of responsibility and 
other factors that fail to adequately adjust and account for local conditions. The 
manufacturer has the burden of proving the reasonableness of its performance 
standards by clear and convincing evidence.  Nothing in this paragraph is intended to 
limit in any way the rights of a dealer under section 1176; 
C-3.  To require any dealer, whether by agreement, program, incentive provision or 
provision for loss of incentive payments or other benefits, to refrain from selling a 
new motor vehicle subject to a stop sale directive, do not drive directive, technical 
service bulletin or other manufacturer notification or pursuant to federal law or to 
perform work on the new motor vehicle unless the manufacturer has a remedy and 
parts available to the dealer to remediate the basis for the coercion or requirement.  If 
within 15 days of the date on which a stop sale directive, do not drive directive, 
technical service bulletin or other manufacturer notification takes effect or similar 
notification pursuant to federal law is issued there is no remedy or parts are not 
available from the manufacturer to remediate each affected new motor vehicle in the 
inventory of the dealer, the manufacturer shall compensate the dealer for any affected 
new motor vehicle in the inventory of the dealer in the amount of at least 1.7% a 
month, or any part thereof, of the cost of the new motor vehicle, based on the dealer 
invoice, including repairs based on the financial records of the dealer.  The 
manufacturer shall establish a written procedure to compensate dealers under this 
paragraph and shall provide a copy of the written procedure to dealers subject to its 
coercion or requirement.  Nothing in this paragraph is intended to limit in any way 
the rights of a dealer under section 1176; 
C-4.  To require any dealer, whether by agreement, program, incentive provision or 
provision for loss of incentive payments or other benefits, to refrain from selling, or 
selling pursuant to a do not drive directive, a used motor vehicle subject to a recall, 
stop sale directive, do not drive directive, technical service bulletin or other 
manufacturer notification or pursuant to federal law or to perform work on the used 
motor vehicle unless the manufacturer has a remedy and parts available to the dealer 
to remediate the basis for the coercion or requirement.  If within 15 days of the date 
on which a recall, stop sale directive, do not drive directive, technical service bulletin 
or other manufacturer notification takes effect or similar notification pursuant to 
federal law is issued there is no remedy or parts are not available from the 
manufacturer to remediate each affected used motor vehicle in the inventory of the 
dealer, the manufacturer shall, commencing on the 16th day, compensate the dealer 
for any affected used motor vehicle in the inventory of the dealer in the amount of at 
least 2.5% a month, or any part thereof, of the cost of the used motor vehicle, the cost 
to be based on the clean retail value of the used motor vehicle according to a 
publication of a national automobile dealers association, including repairs and 
reconditioning expenses based on the financial records of the dealer.  The 
manufacturer shall establish a written procedure to compensate dealers under this 
paragraph and shall provide a copy of the written procedure to dealers subject to its 
coercion or requirement.  Nothing in this paragraph is intended to limit in any way 
the rights of a dealer under section 1176; 
C-5.  A claim for compensation by a dealer under paragraph C-3 or C-4 must be 
submitted on a monthly basis. The manufacturer shall process and pay the claim in 
the same manner as for a claim for warranty reimbursement under section 1176. This 
paragraph does not prevent a manufacturer from requiring that a motor vehicle not be 
subject to an open recall or stop sale directive or do not drive directive in order to be 
qualified, remain qualified or be sold as a certified preowned vehicle or similar 
designation, from paying incentives for selling used vehicles with no unremedied 
recalls or from paying incentives for performing recall repairs on a vehicle in the 
dealer's inventory. 
Nothing in this paragraph prevents a manufacturer from instructing a dealer to repair 
used vehicles of the line make for which the dealer holds a franchise with an open 
recall, as long as the instruction does not involve coercion that imposes a penalty or 
provision of loss of benefits on the dealer. 
A manufacturer may not use any data, calculations or statistical determinations of the 
sales performance of a dealer for any purpose, including loss of incentive payments 
or other benefits, claim of breach or threats thereof or notice of termination or threats 
thereof, for the period of time that the manufacturer has established an agreement, 
program, incentive program or provision for loss of incentive payments or other 
benefits of any kind whatsoever that causes a dealer to refrain from selling any used 
motor vehicle subject to a recall, stop sale directive, do not drive directive, technical 
service bulletin or other manufacturer notification or pursuant to federal law to 
perform work on a dealer's used motor vehicles in its inventory when there is no 
remedy or parts are not available from the manufacturer to remediate each affected 
used motor vehicle and for 90 days after the termination of such an agreement, 
program, incentive program or provision for loss of incentive payments or other 
benefits of any kind whatsoever. The data on which the manufacturer seeks to rely 
under this paragraph may be for only a period or periods not excluded under this 
paragraph.  A dealer is deemed to be in compliance with any performance standard or 
program requirements related to sales performance or sales or service customer 
satisfaction performance of the dealer during the period or periods excluded under 
this paragraph. 
This paragraph does not prevent a manufacturer from requiring that a motor vehicle 
not be subject to an open recall or stop sale directive or do not drive directive, 
technical service bulletin, or other manufacturer notification or similar notification 
pursuant to federal law in order to be qualified, remain qualified or be sold as a 
certified preowned vehicle or similar designation; from paying incentives for selling 
used vehicles with no unremedied recall; from paying incentives for performing 
recalled repairs on a vehicle in the dealer's inventory; or from instructing a dealer to 
repair used vehicles of the line make for which the dealer holds a franchise with an 
open recall as long as the instruction does not involve coercion that imposes a penalty 
or provision of loss of benefits on the dealer. 
A dealer may apply to a manufacturer for adjustment to data, calculations or 
statistical determination of sales performance or sales and service customer 
satisfaction performance for any period of time during which the dealer has at least 
5% of its new motor vehicle inventory subject to a recall, stop sale directive or do not 
drive directive and for 90 days after the end of such a period of time. Within 30 days 
of application for adjustment, the manufacturer shall use reasonable efforts to review 
and adjust the data, calculations or other statistical determinations back to the date the 
dealer was prevented from selling the new motor vehicles. The manufacturer has the 
burden of showing by clear and convincing evidence that the prevention of sale did 
not have a material, adverse effect on the dealer's new vehicle sales performance or 
sales and service customer satisfaction performance, and the adjustments by the 
manufacturer must remediate the effect shown on the data, calculations or statistical 
determinations of sales performance or sales and service customer satisfaction 
performance. 
The manufacturer shall take into consideration any adjustments to a dealer's new 
vehicle sales performance or sales and service customer satisfaction performance 
made by the manufacturer under this paragraph in determining a dealer's compliance 
with a performance standard or program. 
Nothing in this paragraph is intended to limit in any way the rights of a dealer under 
section 1176; 
Sec. 2.  10 MRSA §1174, sub-§3-A, as corrected by RR 2013, c. 1, §20, is 
amended to read: 
3-A.  Successor manufacturer.  Successor manufacturer, for a period of 5 years 
from the date of acquisition of control by that successor manufacturer, to offer a franchise 
to any person for a line make of a predecessor manufacturer in any franchise market area 
in which the predecessor manufacturer previously cancelled, terminated, noncontinued, 
failed to renew or otherwise ended a franchise agreement with a franchisee who had a 
franchise facility in that franchise market area without first offering the franchise to the 
former franchisee at no cost, unless: 
A.  Within 30 days of the former franchisee's cancellation, termination, 
noncontinuance or nonrenewal, the predecessor manufacturer had consolidated the 
line make with another of its line makes for which the predecessor manufacturer had 
a franchisee with a then-existing franchise facility in that franchise market area; 
B.  The successor manufacturer has paid the former franchisee the fair market value 
of the former franchisee's motor vehicle dealership in accordance with this 
subsection; or 
C.  The successor manufacturer proves that the former franchisee is not competent to 
be a franchisee. 
For purposes of this subsection, "franchise market area" means the area located within 15 
miles of the territorial limits of the municipality in which the former franchisee's 
franchise facility was located.  
For purposes of this subsection, the fair market value of a former franchisee's motor 
vehicle dealership must be calculated as of the date of the following that yields the 
highest fair market value:  the date the predecessor manufacturer announced the action 
that resulted in the cancellation, termination, noncontinuance or nonrenewal; the date the 
action that resulted in cancellation, termination, noncontinuance or nonrenewal became 
final; or the date 12 months prior to the date that the predecessor manufacturer announced 
the action that resulted in the cancellation, termination, noncontinuance or nonrenewal; 
and 
Sec. 3.  10 MRSA §1174, sub-§4, ¶F, as enacted by PL 2009, c. 53, §1, is 
amended to read: 
F.  To fail to disclose in writing to a potential purchaser or lessee of a motor vehicle 
that the motor vehicle had previously been returned to the manufacturer pursuant to 
either a lemon law arbitration decision or a lemon law settlement agreement in a state 
other than this State if known to the dealer.  If that information is known to the 
dealer, this disclosure must be clear and conspicuous.  For the purpose of this section, 
"lemon law" refers to any state's certified dispute settlement law that establishes a 
state-certified arbitration procedure to settle consumer complaints that the consumer 
had been sold a vehicle that did not conform to all manufacturer express warranties 
and that the manufacturer had not been able to repair or correct the defect or 
condition that impaired the vehicle.; and 
Sec. 4.  10 MRSA §1174, sub-§5 is enacted to read: 
5.  Consumer notices.  Manufacturer to prohibit a dealer from, or take any adverse 
action against a dealer for, providing to a consumer information given to the dealer by the 
manufacturer related to any condition that may substantially affect motor vehicle safety, 
durability, reliability or performance. 
A.  A manufacturer may not deny a claim, reduce the amount of compensation to a 
dealer or process a charge back to a dealer for performing covered warranty or 
required recall repairs on a vehicle: 
(1)  If the dealer resolved a condition covered by the manufacturer's original 
warranty or any extended warranty of the manufacturer; 
(2)  If the dealer remedied a safety-related defect that is subject to an outstanding 
recall under federal law; 
(3)  If the dealer performed the repairs and submitted the claim; or 
(4)  If the dealer discovered the need for repairs: 
(a)  During the course of a separate repair request by the customer; or 
(b)  Through notice of an outstanding recall under federal law for a safety-
related defect. 
B.  Nothing in this subsection is intended to limit in any way the rights of a dealer 
under section 1176. 
Sec. 5.  10 MRSA §1174-C, sub-§1, ¶A, as amended by PL 2003, c. 356, §9, is 
further amended to read: 
A.  A designated family member of a deceased, 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, wholesaler, distributor branch or distributor representative, 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, wholesaler, distributor 
branch or distributor representative of new motor vehicles written notice of the 
intention to succeed to the dealership within 120 days of the dealer's death, incapacity 
or retirement 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, wholesaler, distributor branch or distributor representative.  The 
manufacturer has the burden of demonstrating good cause by clear and convincing 
evidence. 
Sec. 6.  10 MRSA §1176-A, as amended by PL 2013, c. 534, §8, is further 
amended by adding at the end a new paragraph to read: 
A franchisor may not deny those elements of a paid claim or customer or dealer 
incentive that are based on a dealer's incidental failure to comply with a claim 
requirement or a clerical error or other technicality, regardless of whether the franchisor 
contests any other element of that claim, as long as the dealer corrects the clerical error or 
other technicality according to licensee guidelines. 
SUMMARY 
This bill makes it an unfair and deceptive practice for a motor vehicle manufacturer 
to use unreasonable performance standards in assessing motor vehicle dealer compliance 
with franchise agreements, to require a dealer to refrain from selling a new or used motor 
vehicle when there is no remedy to a recall without the manufacturer's providing 
compensation or to prohibit a dealer from providing to a consumer information of a 
defective condition in a motor vehicle when the vehicle is being repaired under a 
manufacturer's warranty.  It clarifies the standard of review in succession planning and in 
the analysis by a manufacturer of a dealer's sales and incentive performance.