Arkansas Code of 1987 (2023) › Title 23 - PUBLIC UTILITIES AND REGULATED INDUSTRIES (§§ 23-1-101 — 23-119-105) › Subtitle 4 - MISCELLANEOUS REGULATED INDUSTRIES (§§ 23-110-101 — 23-119-105) › Chapter 112 - ARKANSAS MOTOR VEHICLE COMMISSION ACT (§§ 23-112-101 — 23-112-1023) › Subchapter 4 - UNLAWFUL PRACTICES (§§ 23-112-401 — 23-112-407) › Section 23-112-403 - Manufacturers, distributors, second-stage manufacturers, importers, or converters - Definition

(a)
It shall be unlawful:
(1)
For a manufacturer, distributor, second-stage manufacturer, importer, converter, distributor branch or division, or factory branch or division, or an officer, agent, or other representative thereof, to coerce or attempt to coerce any motor vehicle dealer:
(A)
To order or accept delivery of any motor vehicles, appliances, equipment, parts, or accessories therefor or any other commodities which shall not have been voluntarily ordered by the motor vehicle dealer;
(B)
To order or accept delivery of any 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 thereof;
(C)
To order for any person any parts, accessories, equipment, machinery, tools, appliances, or any commodity whatsoever;
(D)
To contribute or pay money or anything of value into any cooperative or other advertising program or fund; or
(E)
To file for or to use a legal or "d/b/a" name or identification other than a name of choice by the dealer;
(2)
For a manufacturer, distributor, distributor branch or division, or factory branch or division, or an officer, agent, or other representative thereof:
(A)
(i)
To fail or refuse to:
(a)
Deliver, in reasonable quantities and within a reasonable time after receipt of a dealer's order to any licensed motor vehicle dealer having a franchise or contractual arrangement for the retail sale of new motor vehicles sold or distributed by the manufacturer, distributor, distributor branch or division, or factory branch or division, any motor vehicles that are covered by the franchise or contract specifically publicly advertised by the manufacturer, distributor, distributor branch or division, or factory branch or division to be available for immediate delivery;
(b)
Make available to each motor vehicle dealer an adequate supply of motor vehicles by series, product line, and model in a fair, reasonable, and equitable manner subject to subdivision (a)(2)(L) of this section;
(c)
Apply fair, reasonable, and equitable performance standards that take into consideration the number of motor vehicles allocated to a motor vehicle dealer when measuring the motor vehicle dealer's sales or service performance under the terms of the franchise agreement;
(d)
Apply its allocation process equitably and not discriminate among motor vehicle dealers; and
(e)
Disclose in writing upon request by a motor vehicle dealer the allocation process or system used by the manufacturer, distributor, distributor branch or division, or factory branch or division.
(ii)
However, the failure to deliver any motor vehicle shall not be considered a violation of this chapter if the failure is due to forces of nature, work stoppages or delays due to strikes or labor difficulties, freight, embargoes, or other causes over which the manufacturer or distributor, or any agent thereof, has no control;
(B)
(i)
To engage in any of the following:
(a)
To coerce or attempt to coerce a motor vehicle dealer to enter into an agreement with the manufacturer, distributor, distributor branch or division, factory branch or division, or officer, agent, or other representative;
(b)
To coerce or attempt to coerce a motor vehicle dealer to use a manufacturer vehicle purchase add-on product or service; or
(c)
To do an act prejudicial to the motor vehicle dealer by threatening to cancel a franchise or a contractual agreement existing between the manufacturer, distributor, distributor branch or division, or factory branch or division and the motor vehicle dealer.
(ii)
However, good faith notice to any motor vehicle dealer of the dealer's violation of any terms or provisions of the franchise or contractual agreement shall not constitute a violation of this chapter;
(C)
(i)
(a)
To terminate or cancel the franchise or selling agreement of any dealer without due cause.
(b)
The nonrenewal of a franchise or selling agreement without due cause shall constitute an unfair termination or cancellation, regardless of the terms or provisions of the franchise or selling agreement.
(c)
As used in this subchapter, tests for determining what constitutes due cause for a manufacturer or distributor to terminate a franchise or sales and service agreement include whether the motor vehicle dealer:
(1)
Has transferred a majority ownership interest in the dealership without the manufacturer's or distributor's consent;
(2)
Has made a material misrepresentation or committed a fraudulent act, or both, in applying for or in acting under the franchise agreement;
(3)
Has filed a voluntary petition in bankruptcy or has had an involuntary petition in bankruptcy filed against him or her that has not been discharged within sixty (60) days after the filing, is in default under a security agreement in effect with the manufacturer or distributor, or is in receivership;
(4)
Has engaged in unfair business or trade practices;
(5)
Has failed to fulfill the warranty obligations of the manufacturer or distributor required to be performed by the motor vehicle dealer;
(6)
Has inadequate motor vehicle sales and service facilities, equipment, vehicle parts, and unqualified service personnel to provide for the needs of the consumers for the motor vehicles handled by the franchisee and is rendering inadequate service to the public;
(7)
Has failed to comply with an applicable federal, state, or local licensing law;
(8)
Has been convicted of a crime, the effect of which would be detrimental to the manufacturer, distributor, or dealership;
(9)
Has failed to operate in the normal course of business for ten (10) consecutive business days or has terminated his or her business;
(10)
Has relocated his or her place of business without the manufacturer's or distributor's consent; or
(11)
Has failed to comply with the terms of the franchise, the reasonableness and fairness of the franchise terms, and the extent and materiality of the franchisee's failure to comply.
(d)
A manufacturer, distributor, second-stage manufacturer, importer, converter, manufacturer branch or division, or distributor branch or division shall have the burden of proving whether there is due cause to terminate a franchise or sales and service agreement.
(ii)
(a)
The manufacturer, distributor, distributor branch or division, factory branch or division, or officer, agent, or other representative thereof shall notify a motor vehicle dealer in writing and forward a copy of the notice to the Arkansas Motor Vehicle Commission of the termination or cancellation of the franchise or selling agreement of the dealer at least sixty (60) days before the effective date thereof, stating the specific grounds for the termination or cancellation.
(b)
However, in the event that the commission finds that the franchise or selling agreement has been abandoned by the dealer, the commission, for good cause, may waive the sixty-day notice requirement and allow for the immediate termination of the franchise or selling agreement.
(iii)
(a)
The manufacturer, distributor, distributor branch or division, factory branch or division, or officer, agent, or other representative thereof shall notify a motor vehicle dealer in writing and forward a copy of the notice to the commission at least sixty (60) days before the contractual term of its franchise or selling agreement expires that the franchise or selling agreement will not be renewed, stating the specific grounds for the nonrenewal in those cases in which there is no intention to renew it.
(b)
In no event shall the contractual term of any franchise or selling agreement expire without the written consent of the motor vehicle dealer involved prior to the expiration of at least sixty (60) days following the written notice.
(iv)
(a)
A motor vehicle dealer who receives written notice that its franchise or selling agreement is being terminated or cancelled or who receives written notice that its franchise or selling agreement will not be renewed may file with the commission within the sixty-day notice period a verified complaint for the commission's determination as to whether the termination or cancellation or nonrenewal is unfair under this chapter.
(b)
That franchise or selling agreement shall continue in effect until final determination of the issues raised in the complaint as allowed under the Arkansas Administrative Procedure Act, §
25-15-201
et seq., notwithstanding anything to the contrary contained in this chapter or in the franchise or selling agreement.
(c)
A manufacturer, distributor, second-stage manufacturer, importer, converter, manufacturer branch or division, or distributor branch or division shall have the burden of proving whether there is due cause to terminate a franchise or sales and service agreement.
(v)
(a)
If the franchise agreement, sales and service agreement, or bona fide contract is terminated or cancelled, the terminating or canceling party shall notify the commission of the termination or cancellation of the franchise or selling agreement at least sixty (60) days before the effective date.
(b)
For motor vehicles other than motor homes, this subdivision (a)(2)(C)(v) applies to both voluntary and involuntary termination or cancellation of the franchise or selling agreement;
(D)
To resort to or use any false or misleading advertisement in connection with its business as a manufacturer, distributor, distributor branch or division, factory branch or division, or officer, agent, or other representative thereof;
(E)
(i)
To offer to sell or to sell any new motor vehicle to any motor vehicle dealer at a lower actual price therefor than the actual price charged to any other motor vehicle dealer for the same model vehicle similarly equipped or to utilize any device, including, but not limited to, sales promotion plans or programs, which results in a lesser actual price.
(ii)
However, the provisions of this subdivision (a)(2)(E) shall not apply:
(a)
To sales to a motor vehicle dealer for resale to any unit of federal, state, or local government;
(b)
To sales to a motor vehicle dealer of any motor vehicle ultimately sold, donated, or used by the dealer in a driver education program; or
(c)
So long as a manufacturer or distributor, or any agent thereof, offers to piggyback bid allowances to all motor vehicle dealers of the same line make at the same allowance for sales to a local government in that dealer's relevant market area.
(iii)
Nothing contained in this subdivision (a)(2)(E) shall be construed to prevent the utilization of sales promotion plans or programs or the offering of volume discounts through new motor vehicle dealers, for fleet or volume purchasers, if the program is available to all new motor vehicle dealers from the same manufacturer in this state;
(F)
To offer to sell or to sell any new motor vehicle to any person, except a wholesaler or distributor, at a lower actual price than the actual price offered and charged to a motor vehicle dealer for the same model vehicle similarly equipped or to utilize any device which results in a lesser actual price;
(G)
(i)
To offer to sell or to sell parts and accessories to any new motor vehicle dealer for use in his or her own business for the purpose of repairing or replacing the parts and accessories, or comparable parts and accessories, at a lower actual price than the actual price charged to any other new motor vehicle dealer for similar parts and accessories for use in its own business.
(ii)
However, it is recognized that certain motor vehicle dealers operate and serve as wholesalers of parts and accessories to retail outlets. Therefore, nothing contained in this subdivision (a)(2)(G) shall be construed to prevent a manufacturer or distributor, or any agent thereof, from selling to a motor vehicle dealer who operates and serves as a wholesaler of parts and accessories such parts and accessories as may be ordered by the motor vehicle dealer for resale to retail outlets at a lower actual price than the actual price charged a motor vehicle dealer who does not operate or serve as a wholesaler of parts and accessories;
(H)
(i)
To prevent or attempt to prevent by contract or otherwise any motor vehicle dealer from changing the capital structure of its dealership or the means by or through which it finances the operation of the dealership, provided that:
(a)
The dealer at all times meets any capital standards agreed to between the dealership and the manufacturer or distributor; and
(b)
The standards are deemed reasonable by the commission.
(ii)
If the dealer of record requests consent from the manufacturer or distributor in writing on the form, if any, generally utilized or required by the manufacturer or distributor for such purposes and the manufacturer or distributor fails to respond in writing, giving or withholding consent, within sixty (60) days of receipt of the written request, consent is deemed to be given;
(I)
(i)
Notwithstanding the terms of any franchise agreement, to fail to give effect or to attempt to prevent any sale or transfer of a dealer, dealership, or franchise or interest therein, or management thereof, provided that the manufacturer or distributor has received sixty (60) days' written notice prior to the transfer or sale, and unless:
(a)
The transferee does not meet the criteria generally applied by the manufacturer in approving new motor vehicle dealers or agree to be bound by all the terms and conditions of the dealer agreement, and the manufacturer so advises its dealer within sixty (60) days of receipt of the notice; or
(b)
It is shown to the commission after a hearing that the result of such a sale or transfer will be detrimental to the public or the representation of the manufacturer or distributor.
(ii)
If the franchisee of record requests consent from the manufacturer or distributor in writing on the form, if any, generally utilized or required by the manufacturer or distributor for such purposes and the manufacturer or distributor fails to respond by giving or withholding consent in writing within sixty (60) days of receipt of the written request, consent is deemed to be given;
(J)
(i)
Notwithstanding the terms of any franchise agreement, to prevent, attempt to prevent, or refuse to honor the succession to a dealership by any legal heir or devisee under the will of a dealer or under the laws of descent and distribution applicable to the decedent's estate, provided that the manufacturer or distributor has received sixty (60) days' written notice prior to the transfer or sale, and unless:
(a)
The transferee does not meet the criteria generally applied by the manufacturer in approving new motor vehicle dealers or agree to be bound by all the terms and conditions of the dealer agreement, and the manufacturer so advises its dealer within thirty (30) days of receipt of the notice; or
(b)
It is shown to the commission, after notice and hearing, that the result of such a succession will be detrimental to the public interest or to the representation of the manufacturer or distributor.
(ii)
However, nothing in this subdivision (a)(2)(J) shall prevent a dealer, during his or her lifetime, from designating any person as his or her successor dealer by written instrument filed with the manufacturer or distributor.
(iii)
If the dealer's successor, heir, or devisee requests consent from the manufacturer or distributor in writing on the form, if any, generally utilized or required by the manufacturer or distributor for such purposes and the manufacturer or distributor fails to respond by giving or withholding consent in writing, within thirty (30) days of receipt of the written request, consent is deemed to be given;
(K)
(i)
Notwithstanding the terms of any franchise agreement, to fail to pay to a dealer or any lienholder in accordance with their respective interests after the termination of franchise:
(a)
The dealer cost plus any charges by the manufacturer, distributor, or a representative for distribution, delivery, and taxes, less all allowances paid to the dealer by the manufacturer, distributor, or representative for new, unsold, undamaged, and complete motor vehicles of current model year and one (1) year prior model year in the dealer's inventory;
(b)
The dealer cost of each new, unused, undamaged, and unsold part or accessory if the part or accessory:
(1)
Was purchased from the manufacturer by the dealer and is in the original package;
(2)
Is identical to a part or accessory in the current parts catalogue except for the number assigned to the part or accessory; or
(3)
Was purchased in the ordinary course of business by the dealer from another authorized dealer so long as the authorized dealer purchased the part or accessory directly from the manufacturer or distributor or from an outgoing authorized dealer as part of the dealer's initial inventory;
(c)
The fair market value of each undamaged sign owned by the dealer which bears a trademark or trade name used or claimed by the manufacturer, distributor, or representative, if the sign was purchased from or purchased at the request of the manufacturer, distributor, or representative;
(d)
The fair market value of all special tools and automotive service equipment owned by the dealer that were recommended in writing and designated as special tools and equipment and purchased from or purchased at the request of the manufacturer, distributor, or representative, if the tools and equipment are in usable and good condition except for reasonable wear and tear;
(e)
The cost of transporting, handling, packing, and loading of motor vehicles, parts, signs, tools, and equipment subject to repurchase;
(f)
The balance of all claims for warranty and recall service and all other money owed by the manufacturer to the dealer;
(g)
(1)
Except as provided under subdivision (a)(2)(K)(i)
(g)(2)
of this section, the fair market value of the franchise that is at least equivalent to the fair market value of the franchise one (1) day before the manufacturer announces the action that results in the termination or discontinuance of a line make.
(2)
If the termination, cancellation, discontinuance, or nonrenewal is due to a manufacturer's change in distributors or manufacturer, the manufacturer may avoid paying fair market value to the new motor vehicle dealer if the distributor, manufacturer, new distributor, or new manufacturer offers the new motor vehicle dealer a franchise agreement with terms substantially similar to terms offered to other same line make new motor vehicle dealers;
(h)
(1)
Compensation for the actual pecuniary loss caused by the franchise termination, cancellation, or nonrenewal unless for due cause.
(2)
In determining the actual pecuniary loss, the value of any continued service or parts business available to the dealer for the line make covered by the franchise shall be considered. If the dealer and the manufacturer, importer, or distributor cannot agree on the amount of compensation to be paid under this subchapter, either party may file an action in a court of competent jurisdiction; or
(i)
Any sums due as provided by subdivision (a)(2)(K)(i)
(a)
of this section within sixty (60) days after termination of a franchise and any sums due as provided by subdivisions (a)(2)(K)(i)
(b)
-
(g)
of this section within ninety (90) days after termination of a franchise. As a condition of payment, the dealer shall comply with reasonable requirements with respect to the return of inventory as are set out in the terms of the franchise agreement. A manufacturer, distributor, or representative who fails to pay those sums within the prescribed time or at such time as the dealer and lienholder, if any, proffer good title before the prescribed time for payment, is liable to the dealer for:
(1)
The greatest of dealer cost, fair market value, or current price of the inventory;
(2)
Interest on the amount due calculated at the rate applicable to a judgment of a court; and
(3)
Reasonable attorney's fees and costs.
(ii)
Obligations under this subdivision (a)(2)(K) do not apply if the termination is a result of the conviction of the franchisee in a court of competent jurisdiction of an offense that is punishable by a term of imprisonment in excess of one (1) year and the offense is substantially related to the business conducted pursuant to the franchise;
(L)
(i)
To fail or refuse to offer its same line make franchised dealers, on similar terms and without arbitrary discrimination, all models manufactured for that line make and all trim level and model variants regardless of differences in engine, technology, or vehicle options.
(ii)
No additional requirements over the requirements originally required to initially obtain a dealership may be required of existing franchised dealers to receive allocation, place an order, or take delivery of any model by that line make, provided that a manufacturer or distributor may require special tools and equipment that are reasonably necessary to sell or service a model or that are reasonably necessary to comply with any law concerning health and safety.
(iii)
A manufacturer or distributor shall not be in violation of this subsection if the vehicle model required under this subdivision (a)(2)(L) is unavailable due to production limitation, supplier limitation, parts limitation, force majeure, or work stoppage;
(M)
(i)
To offer to sell or to sell any motor vehicle to a consumer, except through a licensed new motor vehicle dealer holding a franchise, a sales and service agreement, or a bona fide contract for the line make covering the new motor vehicle or as may otherwise be provided in subdivision (a)(3) of this section.
(ii)
This subdivision (a)(2)(M) does not apply to manufacturer sales of new motor vehicles to the United States Government, charitable organizations, or employees of the manufacturer;
(N)
To prohibit or require a dealer to enter into a franchise or sales agreement with third parties, regardless of the location of the dealership or proposed dealership;
(O)
(i)
To require, coerce, or attempt to coerce any franchisee in this state to refrain from or to terminate, cancel, or refuse to continue any franchise based upon participation by the franchisee in the management of, investment in, or the acquisition of a franchise for the sale of any other line of new motor vehicle or related products in the same or separate facilities as those of the franchiser.
(ii)
This subdivision (a)(2)(O) does not apply unless:
(a)
The franchisee maintains a reasonable line of credit for each make or line of new motor vehicle;
(b)
The franchisee remains in compliance with the franchise and any reasonable facilities requirement of the franchiser; and
(c)
No change is made in the principal management of the franchisee.
(iii)
The reasonable facilities requirement shall not include any requirement that the franchisee establish or maintain exclusive facilities, personnel, or display space when such requirements would not otherwise be justified by reasonable business considerations.
(iv)
(a)
Before the addition of a line make to the dealership facilities, the franchisee must first request consent of the franchiser, if required by the franchise agreement.
(b)
Any decision of the franchiser with regard to dualing of two (2) or more franchises shall be granted or denied within sixty (60) days after a written request from the new motor vehicle dealer. The franchiser's failure to respond timely to a dualing request shall be deemed to be approval of the franchisee's request;
(P)
(i)
To fail to continue in full force and operation a motor vehicle dealer franchise agreement, notwithstanding a change, in whole or in part, of an established plan or system of distribution or ownership of the manufacturer of the motor vehicles offered for sale under the franchise agreement.
(ii)
The appointment of a new importer or distributor for motor vehicles offered for sale under a franchise agreement described in subdivision (a)(2)(P)(i) of this section shall be deemed to be a change of an established plan or system of distribution;
(Q)
(i)
(a)
Unless the manufacturer's, distributor's, second-stage manufacturer's, importer's, converter's, manufacturer's branch or division, or distributor's branch or division requirements are reasonable and justifiable in light of the current and reasonably foreseeable projections of economic conditions, financial expectations, and the motor vehicle dealer's market and notwithstanding the terms of a franchise agreement or sales and service agreement, to require, coerce, or attempt to coerce any new motor vehicle dealer by program, policy, standard, or otherwise to:
(1)
Change location of the dealership;
(2)
Make any substantial changes, alterations, or remodeling to a motor vehicle dealer's sales or service facilities; or
(3)
Replace a motor vehicle dealer's sales or service facilities.
(b)
A manufacturer, distributor, second-stage manufacturer, importer, converter, manufacturer branch or division, or distributor branch or division shall have the burden of proving that changes, alterations, remodeling, or replacement to a motor vehicle dealer's sales or service facilities are reasonable and justifiable under this subchapter.
(ii)
(a)
However, a manufacturer, distributor, second-stage manufacturer, importer, convertor, manufacturer branch or division, or distributor branch or division, consistent with its allocation obligations at law and to its other same line make motor vehicle dealers, may provide to a motor vehicle dealer a commitment to supply additional vehicles or provide a loan or grant of money as an inducement for the motor vehicle dealer to expand, improve, remodel, alter, or renovate its facilities if the provisions of the commitment are contained in a writing voluntarily agreed to by the dealer and are made available, on substantially similar terms, to any of the licensee's other same line make dealers who voluntarily agree to make a substantially similar facility expansion, improvement, remodeling, alteration, or renovation.
(b)
Subdivision (a)(2)(Q)(i) and subdivision (a)(2)(Q)(ii)
(a)
of this section do not require a manufacturer, distributor, second-stage manufacturer, importer, convertor, manufacturer branch or division, or distributor branch or division to provide financial support for or contribution to the purchase sale of the assets of or equity in a motor vehicle dealer or a relocation of a motor vehicle dealer because such support has been provided to other purchases, sales, or relocations.
(c)
A manufacturer, distributor, second-stage manufacturer, importer, convertor, manufacturer branch or division, or distributor branch or division shall not take or threaten to take any action that is unfair or adverse to a dealer who does not enter into an agreement pursuant to subdivision (a)(2)(Q)(i) and subdivision (a)(2)(Q)(ii)
(a)
of this section.
(d)
This subdivision does not affect any contract between a licensee and any of its dealers regarding relocation, expansion, improvement, remodeling, renovation, or alteration which exists on July 27, 2011;
(R)
To unreasonably withhold approval for a new motor vehicle dealer to purchase goods and services of substantially similar quality, design, and functionality related to facility changes, alterations, remodels, equipment, or digital platforms that do not contain or utilize a manufacturer's or distributor's intellectual property or proprietary design from vendors the motor vehicle dealer chooses;
(S)
To require as a prerequisite to receiving a model or a series of vehicles a motor vehicle dealer to:
(i)
Pay an extra fee or remodel, renovate, or recondition the motor vehicle dealer's existing facilities unless justified by the technological requirements for the sale or service of a motor vehicle;
(ii)
Purchase unreasonable advertising displays, training, tools, or other materials;
(iii)
Establish exclusive facilities;
(iv)
Establish dedicated personnel;
(v)
Utilize certain digital platforms; or
(vi)
Enroll in a service loaner or demonstration program;
(T)
(i)
(a)
To use any written instrument, agreement, or waiver, to attempt to nullify or modify any provision of this chapter or prevent a new motor vehicle dealer from bringing an action in a particular forum otherwise available under law.
(b)
An instrument contrary to this subdivision (a)(2)(T)(i) is void.
(c)
However, this subdivision shall not apply to:
(1)
Voluntary agreements in which separate and valuable consideration has been offered and accepted; or
(2)
Settlement agreements entered into as a result of a dispute.
(ii)
(a)
Except as provided in subdivision (a)(2)(Q)(ii)
(b)
of this section, a manufacturer, distributor, or factory branch shall not directly or indirectly condition any of the following on the willingness of a motor vehicle dealer, proposed new motor vehicle dealer, or owner of an interest in the dealership facility to enter into a site-control agreement or exclusive-use agreement:
(1)
Awarding a franchise to a prospective new motor vehicle dealer;
(2)
Adding a line make or franchise to an existing motor vehicle dealer;
(3)
Renewing a franchise of an existing motor vehicle dealer;
(4)
Approving the relocation of an existing motor vehicle dealer's facility; or
(5)
Approving the sale or transfer of the ownership of a franchise.
(b)
This subdivision does not apply to a site-control agreement or an exclusive-use agreement if the site-control agreement or an exclusive-use agreement:
(1)
Is voluntarily entered into by the motor vehicle dealer or the motor vehicle dealer's lessor;
(2)
Clearly and conspicuously discloses that the site-control agreement or an exclusive-use agreement is voluntary; and
(3)
Provides for separate and valuable consideration to the motor vehicle dealer or motor vehicle dealer's lessor.
(iii)
Any provision contained in any agreement that is inconsistent with this subchapter is voidable at the election of the affected motor vehicle dealer or owner of an interest in the dealership facility; or
(U)
To do any of the following:
(i)
Fail to offer to all of its franchisees of the same line make any consumer rebates, dealer incentives, price or interest rate reduction, or finance terms that the franchisor offers or advertises;
(ii)
Offer rebates, cash incentives, or other promotional items for the sale of a vehicle by its franchisees unless the same rebate, cash incentive, or promotion is offered to all of its franchisees of the same line make, and any rebate, cash incentive, or promotion that is based on the sale of an individual vehicle is not increased for meeting a performance standard;
(iii)
Unreasonably discriminate among its franchisees in any program that provides assistance to its franchisees, including internet listings, sales leads, warranty policy adjustments, marketing programs, or dealer recognition programs;
(iv)
Fail to offer rebates, cash incentives, or other promotional incentive programs on a fair and equitable or proportionally equivalent basis to its franchisees of the same line make;
(v)
Require a motor vehicle dealer to improve the dealer's facilities, including signs, or to replace factory required and approved facility improvements completed within the last ten (10) years to qualify for a new vehicle sales incentive program;
(vi)
Fail to allow a motor vehicle dealer to maintain and control the vehicle inventory and service provider for the motor vehicle dealer's digital platforms;
(vii)
(a)
Exercise control over a motor vehicle dealer's digital platforms without the motor vehicle dealer's permission, including without limitation control over the:
(1)
Price paid by the motor vehicle dealer to utilize the digital platforms, except as provided in a marketing program in which the motor vehicle dealer participates or in a minimum advertised price policy;
(2)
Content exhibited on the digital platforms; and
(3)
Data feed that syndicates inventory to digital platforms.
(b)
This section does not prevent a manufacturer or distributor from requiring that a motor vehicle dealer ensure that the digital platforms and all information exhibited on or contained within the digital platforms do not:
(1)
Infringe upon or impair the manufacturer's or distributor's intellectual property rights, usage policies, or security requirements; and
(2)
Disclose the manufacturer's or distributor's confidential information.
(c)
This section does not:
(1)
Require a manufacturer or distributor to consider, evaluate, or include a digital platform or digital platform provider in the manufacturer's or distributor's list of approved digital platforms or digital providers;
(2)
Prohibit a manufacturer or distributor from establishing digital platform requirements under a voluntary program available to a motor vehicle dealer; or
(3)
Prohibit minimum advertised pricing;
(viii)
(a)
When providing a new motor vehicle to a motor vehicle dealer for offer or sale to the public, fail to provide to the motor vehicle dealer a written disclosure that may be provided to a potential buyer of a new motor vehicle of each accessory or function of the new motor vehicle that may be initiated, updated, changed, or maintained by the manufacturer or distributor through over-the-air or remote means, and the charge to the new motor vehicle buyer at the time of the new motor vehicle sale for the initiation, update, change, or maintenance.
(b)
A manufacturer or distributor may comply with this subdivision (a)(2)(U)(viii) by notifying the motor vehicle dealer that the information contained in the written disclosure under subdivision (a)(2)(U)(viii)
(a)
of this section is available on a website or through other digital means; or
(ix)
Fail to provide a motor vehicle dealer the option to purchase, rather than lease, items related to a factory required and approved facility improvement other than signage that bears a trademark, trade name, or commercial symbol used or claimed by the manufacturer, distributor, distributor branch or division, or factory branch or division;
(3)
(A)
For a manufacturer, distributor, distributor branch or division, or factory branch or division, or an officer, agent, or other representative thereof to own, operate, or control any motor vehicle dealer or to directly lease a motor vehicle at retail leasing in this state.
(B)
Subdivision (a)(3)(A) of this section does not prohibit:
(i)
The operation by a manufacturer or distributor of a motor vehicle dealer for a temporary period, not to exceed one (1) year, during the transition from one (1) owner or operator to another, provided that the commission may extend the one (1) year period if the transition is not complete;
(ii)
The ownership or control of a motor vehicle dealer by a manufacturer during a period in which the motor vehicle dealer is being sold under a bona fide contract or purchase option to the operator of the dealership;
(iii)
The ownership, operation, or control of a motor vehicle dealer by a manufacturer, if:
(a)
The manufacturer has been engaged in the retail sale of new motor vehicles at the location for a continuous period of five (5) years prior to January 1, 1999; and
(b)
The commission determines after a hearing on the matter at the request of any party that there is no prospective new motor vehicle dealer available to own and operate the franchise in a manner consistent with the public interest; or
(iv)
The ownership, operation, or control of a motor vehicle dealer by a manufacturer, if the manufacturer is:
(a)
A manufacturer of specialty vehicles, such as unassembled kits, and does not sell more than ten (10) assembled vehicles annually; or
(b)
A custom motorcycle builder and does not sell more than five (5) assembled motorcycles annually;
(4)
(A)
For a manufacturer to unfairly compete with a motor vehicle dealer of the same line make, operating under a franchise, in the relevant market area.
(B)
"Unfairly compete", as used in this section, includes, but is not limited to:
(i)
Internet solicitations; and
(ii)
Preferential treatment of manufacturer-operated dealerships in the supply of inventory, both as to quantity and availability of the latest models of that line make, supply of parts, and payments for warranty and recall claims.
(C)
Ownership, operation, or control of a new motor vehicle dealer by a manufacturer under the conditions set forth in subdivisions (a)(3)(A)(i)-(iv) of this section shall not constitute a violation of this subdivision (a)(4); or
(5)
(A)
To unreasonably reduce a motor vehicle dealer's area of sales effectiveness, trade area, or similar designation without giving a notice of at least thirty (30) days of the proposed reduction.
(B)
The change shall not take effect if the dealer commences an administrative action to determine whether there is good cause for the change within the thirty-day notice period.
(C)
The burden of proof in an action under this subdivision (a)(5) shall be on the manufacturer, distributor, second-stage manufacturer, importer, converter, manufacturer branch or division, or distributor branch or division to prove that good cause exists to change the motor vehicle dealer's area of sales effectiveness, trade area, or similar designation.
(b)
(1)
Notwithstanding the terms of any franchise except a settlement agreement voluntarily entered into, it shall be a violation for a motor vehicle franchiser to require a motor vehicle franchisee to agree to a term or condition in any franchise as a condition of the offer, grant, or renewal of the franchise or the approval of the sale, acquisition, or transfer of the assets of a new motor vehicle dealer, which:
(A)
Requires the motor vehicle franchisee to waive trial by jury in actions involving the motor vehicle franchiser;
(B)
Specifies the jurisdictions, venues, or tribunal in which disputes arising with respect to the franchise, lease, or agreement shall or shall not be submitted for resolution, or otherwise prohibits a motor vehicle franchisee from bringing an action in a particular forum otherwise available under federal or state law;
(C)
Requires a new motor vehicle dealer to pay the attorney's fees of a manufacturer, importer, second-stage manufacturer, converter, or distributor;
(D)
Requires the motor vehicle franchisee to waive any remedy or defense available to the franchisee or other provision protecting the interests of the franchisee under this chapter; or
(E)
(i)
Requires that disputes between the motor vehicle franchiser and motor vehicle franchisee be submitted to binding arbitration or to any other binding alternative dispute resolution procedure provided by the franchiser.
(ii)
However, any franchise, lease, or agreement may authorize the submission of a dispute to arbitration or to binding alternative dispute resolution if the motor vehicle franchiser and motor vehicle franchisee voluntarily agree to submit the dispute to binding arbitration or binding alternative dispute resolution after the dispute arises.
(iii)
If the franchiser and franchisee agree to binding arbitration, the arbitrator shall apply the provisions of this chapter in resolving the pertinent controversy and shall provide the parties to a contract with a written explanation of the factual and legal basis for the award. Either party may appeal to the commission a decision of an arbitrator on the ground that the arbitrator failed to apply this chapter.
(2)
For the purposes of this section, it shall be presumed that a motor vehicle franchisee has been required to agree to a term or condition in violation of this section as a condition of the offer, grant, or renewal of a franchise or of any lease or agreement ancillary or collateral to a franchise, if the motor vehicle franchisee, at the time of the offer, grant, or renewal of the franchise, lease, or agreement or the approval of the sale, acquisition, or transfer of the assets of a new motor vehicle dealer, is not offered the option of an identical franchise, lease, or agreement without the terms or conditions prescribed by this section.
(c)
Concerning any sale of a motor vehicle or vehicles to the State of Arkansas or to the several counties or municipalities thereof or to any other political subdivision thereof, no manufacturer or distributor shall offer any discounts, refunds, or any other similar type inducements to any dealer without making the same offers to all other of its dealers within the state. If the inducements are made, the manufacturer or distributor shall give simultaneous notice thereof to all of its dealers within the state.
Amended by Act 2023, No. 515,§ 4, eff. 8/1/2023.
Amended by Act 2023, No. 515,§ 3, eff. 8/1/2023.
Amended by Act 2021, No. 1077,§ 12, eff. 7/28/2021.
Amended by Act 2021, No. 1077,§ 11, eff. 7/28/2021.
Amended by Act 2021, No. 1077,§ 10, eff. 7/28/2021.
Amended by Act 2021, No. 1077,§ 9, eff. 7/28/2021.
Amended by Act 2021, No. 1077,§ 8, eff. 7/28/2021.
Amended by Act 2019, No. 924,§ 5, eff. 7/24/2019.
Amended by Act 2019, No. 924,§ 7, eff. 7/24/2019.
Amended by Act 2019, No. 924,§ 6, eff. 7/24/2019.
Amended by Act 2019, No. 391,§ 15, eff. 7/24/2019.
Amended by Act 2015, No. 1055,§ 7, eff. 7/22/2015.
Amended by Act 2013, No. 1133,§ 10, eff. 8/16/2013.
Amended by Act 2013, No. 1133,§ 9, eff. 8/16/2013.
Amended by Act 2013, No. 1043,§ 8, eff. 1/1/2014.
Amended by Act 2013, No. 1043,§ 7, eff. 1/1/2014.
Amended by Act 2013, No. 1043,§ 6, eff. 1/1/2014.
Amended by Act 2013, No. 561,§ 6, eff. 8/16/2013.
Acts 1975, No. 388, § 5; 1985, No. 1032, § 3; 1985, No. 1058, § 3; A.S.A. 1947, § 75-2305; Acts 1987, No. 663, § 1; 1989, No. 65, §§ 4, 5; 1991, No. 411, § 4; 1991, No. 730, § 1; 1997, No. 1154, § 13; 1999, No. 1042, § 9; 2001, No. 1053, § 16; 2007, No. 746, §§ 3, 4; 2009, No. 756, §§ 13-15; 2011, No. 800, § 1; 2011, No. 1005, §§ 10-16.