2023 CODE OF GEORGIA › Title 10 - COMMERCE AND TRADE (§§ 10-1-1 — 10-15-7) › Chapter 1 - SELLING AND OTHER TRADE PRACTICES (§§ 10-1-1 — 10-1-945) › Article 22 - MOTOR VEHICLE FRANCHISE PRACTICES (§§ 10-1-620 — 10-1-670) › Part 3 - MOTOR VEHICLE WARRANTY PRACTICES (§§ 10-1-640 — 10-1-645) › Section 10-1-641 - Dealer's predelivery preparation, warranty service, and recall work obligations to be provided in writing; recovery of costs; "stop-sale" defined

(a)
(1)
Each franchisor, manufacturer, or distributor:
(A)
Shall specify in writing to each of its dealers in this state the dealer's obligations for predelivery preparation including the repair of damages incurred in the transportation of vehicles as set forth in Code Section
10-1-642
, recall work, and warranty service on its products;
(B)
Shall, at the election of the dealer, reasonably compensate the dealer for parts and labor provided for such warranty service work as provided in paragraph (2) of this subsection;
(C)
Shall provide the dealer with a schedule of compensation to be paid such dealer for parts, work, and service in connection therewith; and
(D)
Shall provide the dealer with a schedule of the time allowance for the performance of such work and service. Any such schedule of compensation shall include reasonable compensation for diagnostic work, repair service, and labor. Time allowances for the diagnosis and performance of such work and service shall be reasonable and adequate for the work to be performed.
(2)
(A)
In the determination of what constitutes reasonable compensation for parts and labor under this Code section, the principal factors to be considered shall be the retail rates customarily charged by the dealer, as established pursuant to this paragraph, and the rates for parts and labor charged by other similarly situated franchised dealers in a comparable geographic area in this state offering the same line-make vehicles.
(B)
The retail rate customarily charged by the dealer for parts shall be established by the dealer submitting to the franchisor, manufacturer, or distributor 100 sequential nonwarranty customer-paid service repair orders which contain warranty-like repairs or 90 consecutive days of nonwarranty customer-paid service repair orders which contain warranty-like parts, whichever is less. Such service repair orders shall cover repairs made no more than 180 days before the submission. If the franchisor, manufacturer, or distributor determines, from any set of repair orders submitted under this subparagraph, that the retail markup rate for parts calculated is substantially higher or lower than the rate currently on record with the franchisor, manufacturer, or distributor, then the franchisor, manufacturer, or distributor may request additional documentation for a period of either 60 days prior to or 60 days subsequent to the time period for which the repair orders were submitted for purposes of an adjustment. The dealer's retail rate percentage for parts shall be calculated by determining the dealer's total parts sales in the submitted repair orders and dividing that amount by the dealer's total cost for purchase of those parts, subtracting one from that amount, and then multiplying by 100. The declared retail rate shall be approved or disapproved within 30 days following submission by the dealer. The declared retail rate shall go into effect 30 days following approval by the franchisor, manufacturer, or distributor, unless such franchisor, manufacturer, or distributor disapproves and timely contests the dealer's declared rate. If a franchisor, manufacturer, or distributor fails to disapprove within 30 days following submission by the dealer, the declared retail rate shall be deemed approved. A franchisor, manufacturer, or distributor may contest the dealer's declared parts rate not later than 30 days after submission and declaration of the parts rate by the dealer by reasonably substantiating that the rate is unreasonable in light of the practices of all other similarly situated franchised dealers in a comparable geographic area in this state offering the same line-make vehicles. In contesting the dealer's declared rate, a franchisor, manufacturer, or distributor shall provide a written explanation of the reasons for disagreement with the declared rate. If the declared parts rate is contested, then the franchisor, manufacturer, or distributor shall propose an adjustment of the rate. If the franchisor, manufacturer, or distributor contests the dealer's declared parts rate, the parties shall attempt to resolve the dispute through an internal dispute resolution procedure of the franchisor, manufacturer, or distributor, if available, provided that such procedure occurs within a reasonable amount of time, not to exceed 30 days after notification of disagreement with the dealer's declared rate. If the internal dispute resolution procedure is unsuccessful or does not occur in a timely manner, the dealer may file a petition with the commissioner not later than 60 days after receipt of the proposed adjustment by the franchisor, manufacturer, or distributor or not later than 30 days after conclusion of the internal dispute resolution procedure, whichever is later. If such a petition is filed, the commissioner shall inform the franchisor, manufacturer, or distributor that a timely petition has been filed and that a hearing will be held on such issue. In any hearing held pursuant to this subparagraph, the burden of proof shall be upon the franchisor, manufacturer, or distributor to demonstrate that the parts rate declared by the dealer was unreasonable and not in accordance with this subparagraph.
(C)
The retail rate customarily charged by the dealer for labor may be established by submitting to the franchisor, manufacturer, or distributor 100 sequential nonwarranty customer-paid service repair orders for warranty-like repairs or 90 consecutive days of customer-paid service repair orders for warranty-like repairs, whichever is less. Such service repair orders shall cover repairs made no more than 180 days before the submission. If the franchisor, manufacturer, or distributor determines, from any set of repair orders submitted under this subparagraph, that the retail rate for labor calculated is substantially higher or lower than the rate currently on record with the franchisor, manufacturer, or distributor, then the franchisor, manufacturer, or distributor may request additional documentation for a period of either 60 days prior to or 60 days subsequent to the time period for which the repair orders were submitted for purposes of an adjustment. The retail rate for labor shall be calculated by determining the dealer's total labor sales from the submitted repair orders and dividing that amount by the total number of hours that generated those sales. The declared retail labor rate shall be approved or disapproved within 30 days following submission by the dealer. The declared retail labor rate shall take effect 30 days following approval by the franchisor, manufacturer, or distributor unless such franchisor, manufacturer, or distributor disapproves and timely contests the dealer's declared rate. A franchisor, manufacturer, or distributor may contest the dealer's declared labor rate not later than 30 days after submission and declaration of the labor rate by the dealer by reasonably substantiating that such rate is unreasonable in light of the practices of all other similarly situated franchised motor vehicle dealers in a comparable geographic area in this state offering the same line-make vehicles. If the declared labor rate is contested, then the franchisor, manufacturer, or distributor shall propose an adjustment of the declared retail labor rate. If the franchisor, manufacturer, or distributor contests the dealer's declared labor rate, the parties shall attempt to resolve the dispute through an internal dispute resolution procedure of the franchisor, manufacturer, or distributor, if available, provided that such procedure occurs within a reasonable amount of time not to exceed 30 days after notification of disagreement with the dealer's declared rate. If the internal dispute resolution procedure is unsuccessful or does not occur in a timely manner, the dealer may file a petition with the commissioner not later than 60 days after receipt of the proposed adjustment by the franchisor, manufacturer, or distributor or not later than 30 days after conclusion of the internal dispute resolution procedure, whichever is later. If such a petition is filed, the commissioner shall inform the franchisor, manufacturer, or distributor that a timely petition has been filed and that a hearing will be held on such issue. In any hearing held pursuant to this subparagraph, the burden of proof shall be upon the franchisor, manufacturer, or distributor to demonstrate that the labor rate declared by the dealer was unreasonable and not in accordance with this subparagraph.
(D)
In calculating the retail rate customarily charged by the dealer for parts and labor for purposes of this paragraph, the following work shall not be included in the calculation:
(i)
Repairs for franchisor, manufacturer, or distributor special events, specials, or promotional discounts for retail customer repairs;
(ii)
Parts sold at wholesale;
(iii)
Routine maintenance not covered under any retail customer warranty, such as fluids, filters, and belts not provided in the course of repairs;
(iv)
Nuts, bolts, fasteners, and similar items which contain no individual part number;
(v)
Tires; and
(vi)
Vehicle reconditioning.
(E)
If a franchisor, manufacturer, or distributor furnishes a part or component to a dealer to use in performing repairs under a recall, campaign service action, or warranty repair at no cost to the dealer, the franchisor, manufacturer, or distributor shall compensate the dealer for the authorized repair part or component in the same manner as warranty parts compensation under this Code section by paying the dealer the retail rate markup on the cost for the part or component as listed in the price schedule of the franchisor, manufacturer, or distributor less the cost for the part or component.
(F)
No franchisor, manufacturer, or distributor shall require a dealer to establish the retail rate customarily charged by the dealer for parts and labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations. No dealer shall declare a retail rate for parts or labor or both more than once in one calendar year.
(b)
(1)
Franchisors, manufacturers, and distributors shall include in written notices of factory recalls to dealers the expected date by which necessary parts and equipment will be available to dealers for the repair or replacement of recalled parts and equipment. Franchisors, manufacturers, and distributors shall compensate any dealers in this state for repairs affected by all recalls.
(2)
All such claims shall be either approved or disapproved within 30 days after their receipt on forms and in the manner specified by the franchisor, manufacturer, or distributor, and any claim not specifically disapproved in writing within 30 days after the receipt shall be construed to be approved and payment must follow within 30 days.
(c)
Subject to Code Section
10-1-645
, a franchisor, manufacturer, or distributor shall not recover its costs from dealers within this state, including a surcharge imposed on a dealer solely intended to recover the cost of reimbursing the dealer for parts and labor pursuant to this Code section, provided that a franchisor, manufacturer, or distributor shall not be prohibited from increasing prices for vehicles or parts in the normal course of business.
(d)
(1)
For purposes of this subsection, the term "stop-sale" means a notification issued by a manufacturer to its franchised dealers stating that certain used motor vehicles in inventory shall not be sold or leased, at either retail or wholesale, due to a federal safety recall for a defect or a noncompliance or a federal emissions recall.
(2)
A franchisor, manufacturer, or distributor shall compensate its dealers for all labor and parts required by the manufacturer to perform recall repairs. Compensation for recall repairs shall be reasonable. If parts or a remedy are not reasonably available to perform a recall service or repair on a used vehicle held for sale by a dealer authorized to sell and service new motor vehicles of the same line-make within 30 days of the manufacturer issuing the initial notice of recall, and the manufacturer has issued a stop-sale or do not drive order on the vehicle, the manufacturer shall compensate the dealer at a prorated rate of at least 1 percent of the value of the vehicle per month beginning on the date that is 30 days after the date on which the stop-sale or do not drive order was provided to the dealer to the earlier of the date the recall or repair parts or remedy are made available or the date the dealer sells, trades, transfers, or otherwise disposes of the affected used motor vehicle.
(3)
The value of a used motor vehicle shall be the average trade-in value for used motor vehicles as indicated in an independent third-party guide for the year, make, and model of the recalled vehicle.
(4)
This subsection shall apply only to used motor vehicles subject to safety or emissions recalls pursuant to and recalled in accordance with federal law and regulations adopted thereunder and where a stop-sale or do not drive order has been issued and repair parts or remedy remain unavailable for 30 days or longer.
(5)
This subsection shall apply only to dealers holding an affected used motor vehicle for sale in inventory at the time a stop-sale or do not drive order is issued or which was taken into the used motor vehicle inventory of the dealer as a consumer trade-in incident to the purchase of a new motor vehicle from the dealer after the stop-sale or do not drive order was issued, and that are a line-make that the dealer is franchised to sell or on which the dealer is authorized to perform recall repairs.
(6)
It shall be a violation of this subsection for a manufacturer to reduce the amount of compensation otherwise owed to an individual dealer, whether through a chargeback, removal of the individual dealer from an incentive program, or reduction in amount owed under an incentive program, solely because the dealer has submitted a claim for reimbursement under this subsection. This subsection shall not apply to an action by a manufacturer that is applied uniformly among all dealers of the same line-make in this state.
(7)
All reimbursement claims made by dealers pursuant to this subsection for recall remedies or repairs, or for compensation where no part or repair is reasonably available and the vehicle is subject to a stop-sale shall be subject to the same limitations and requirements as a warranty reimbursement claim made under this subsection. In the alternative, a manufacturer may compensate its franchised dealers under a national recall compensation program provided the compensation under the program is equal to or greater than that provided under this subsection; or the manufacturer and dealer otherwise agree.
(8)
A manufacturer may direct the manner and method in which a dealer must demonstrate the inventory status of an affected used motor vehicle to determine eligibility under this subsection, provided that the manner and method may not be unduly burdensome and may not require information that is unduly burdensome to provide.
(9)
Nothing in this subsection shall require a manufacturer to provide total compensation to a dealer which would exceed the total average trade-in value of the affected used motor vehicle as originally determined under paragraph (3) of this subsection.
(10)
Any remedy provided to a dealer under this subsection is exclusive and may not be combined with any other state or federal recall compensation remedy.
Amended by 2024 Ga. Laws 701,§ 2, eff. 7/1/2024.
Amended by 2021 Ga. Laws 307,§ 10, eff. 5/10/2021.
Amended by 2019 Ga. Laws 157,§ 3, eff. 7/1/2019.
Amended by 2017 Ga. Laws 201,§ 1, eff. 7/1/2017.
Amended by 2010 Ga. Laws 645,§ 6, eff. 6/4/2010.