2023 Indiana Code › Title 9. Motor Vehicles › Article 32. Dealer Services › Chapter 13. Unfair Practices › 9-32-13-22. Franchise Termination; Right of First Refusal

Sec. 22. (a) It is an unfair practice for a manufacturer to terminate a franchise in violation of IC 23-2-2.7-3. A dealer may not transfer, assign, or sell the business and assets of a dealership or an interest in the dealership to another person under an agreement that contemplates or is conditioned on a continuation of the franchise relationship with the manufacturer or distributor unless the dealer first:
(1) notifies the manufacturer or distributor of the dealer's decision to make the transfer, assignment, or sale by written notice; and
(2) obtains the approval of the manufacturer or distributor.
The dealer must provide the manufacturer or distributor with completed application forms and related information generally used by the manufacturer or distributor to conduct a review of such a proposal and a copy of all agreements regarding the proposed transfer, assignment, or sale.
(b) The manufacturer or distributor shall send a letter by certified mail to the dealer not later than sixty (60) days after the manufacturer or distributor receives the information specified in subsection (a). The letter must indicate any disapproval of the transfer, assignment, or sale and must set forth the material reasons for the disapproval. If the manufacturer or distributor does not respond by letter within sixty (60) days after the manufacturer or distributor receives the information under subsection (a), the manufacturer's or distributor's consent to the proposed transfer, assignment, or sale is considered to have been granted. A manufacturer or distributor may not unreasonably withhold approval of a transfer, assignment, or sale under this section.
(c) A manufacturer or distributor has a right of first refusal as specified in the franchise agreement to acquire the new motor vehicle dealer's assets or ownership if there is a proposed change of more than fifty percent (50%) of the dealer's ownership or proposed transfer of more than fifty percent (50%) of the new motor vehicle dealer's assets, and all the following are met:
(1) The manufacturer or distributor notifies the dealer in writing of the intent of the manufacturer or distributor to exercise the right of first refusal within the sixty (60) day notice period under subsection (b).
(2) The exercise of the right of first refusal will result in the dealer and the dealer's owners receiving consideration, terms, and conditions that are either the same as or better than those they have contracted to receive under the proposed change of more than fifty percent (50%) of the dealer's ownership or transfer of more than fifty percent (50%) of the new motor vehicle dealer's assets.
(3) The proposed change of the dealership's ownership or transfer of the new motor vehicle dealer's assets does not involve the transfer of assets or the transfer or issuance of stock by the dealer or one (1) or more of the dealer's owners to any of the following:
(A) A designated family member or members, including any of the following members of one (1) or more dealer owners:
(i) The spouse.
(ii) A child.
(iii) A grandchild.
(iv) The spouse of a child or a grandchild.
(v) A sibling.
(vi) A parent.
(B) A manager:
(i) employed by the dealer in the dealership during the previous four (4) years; and
(ii) who is otherwise qualified as a dealer operator.
(C) A partnership or corporation controlled by any of the family members described in clause (A).
(D) A trust arrangement established or to be established:
(i) for the purpose of allowing the new motor vehicle dealer to continue to qualify as such under the manufacturer's or distributor's standards; or
(ii) to provide for the succession of the franchise agreement to designated family members or qualified management in the event of the death or incapacity of the dealer or the principal owner or owners.
(4) Except as otherwise provided in this subsection, the manufacturer or distributor agrees to pay the reasonable expenses, including reasonable attorney's fees, that do not exceed the usual, customary, and reasonable fees charged for similar work done for other clients, and that are incurred by the proposed owner or transferee before the manufacturer's or distributor's exercise of the right of first refusal in negotiating and implementing the contract for the proposed change of the dealer ownership or the transfer of the new motor vehicle dealer's assets. Payment of expenses and attorney's fees is not required if the dealer has failed to submit an accounting of those expenses not later than twenty (20) days after the dealer receives the manufacturer's or distributor's written request for such an accounting. An expense accounting may be requested by a manufacturer or distributor before exercising the right of first refusal.
(d) Violation of this section by a manufacturer or distributor is an unfair practice by the manufacturer or distributor.
As added by P.L.92-2013, SEC.78. Amended by P.L.174-2016, SEC.102.