2023 New York Laws › VAT - Vehicle and Traffic › Title 4 - Registration of Vehicles › Article 17-A - Franchised Motor Vehicle Dealer Act › 463 - Unfair Business Practices by Franchisors.

§  463.  Unfair  business  practices  by  franchisors.  1. It shall be
unlawful for any franchisor to directly or indirectly coerce or  attempt
to coerce any franchised motor vehicle dealer:
(a)  To  order  or  accept  delivery of any motor vehicle or vehicles,
appliances, tools, machinery, equipment, parts or  accessories  therefor
or  any  other  commodity  or  commodities  which  shall  not  have been
voluntarily ordered by said franchised motor vehicle dealer  except  any
such items required by a recall campaign.
(b)  To  order  or  accept  delivery of any motor vehicle with special
features, appliances, accessories or equipment not included in the  list
price of said motor vehicle as publicly advertised by the franchisor.
(c)  To  contribute  or  pay  money  or  anything  of  value  into any
cooperative or other advertising program or fund unless such program  or
fund shall be controlled by a dealer or group of dealers.
(d)  To  participate  in  any  training program unless such program is
expressly limited to specific information necessary to sell  or  service
the models of vehicles the dealer is authorized to sell or service under
the  dealer's  franchise  with  that  franchisor. A franchisor shall not
unreasonably require an owner or dealer principal  of  a  dealership  to
attend  any  meeting  or  training  program.  A  franchisor who requires
participation in a training program  as  authorized  by  this  paragraph
shall  to  the largest extent practicable make all reasonable efforts to
limit or reimburse the expenses of a dealer incurred in  attending  such
program.  Nothing  in  this  paragraph  shall  be deemed to prohibit any
training program located  within  a  dealer's  own  principal  place  of
business.
(e)  To  sell,  or  sell  exclusively  an  extended  service contract,
extended maintenance plan or similar product, including, but not limited
to, gap products offered, endorsed or sponsored by the franchisor by the
following means:
(1) by a statement made by the franchisor that failure to do  so  will
substantially and adversely impact the dealer; or
(2)  by  a provision in a franchise agreement that the dealer sell, or
sell exclusively an extended service contract, extended maintenance plan
or similar product offered, endorsed or sponsored by the franchisor; or
(3) by measuring the dealer's performance under the franchise based on
the sale of extended service contracts, extended  maintenance  plans  or
similar  products  offered, endorsed or sponsored by the manufacturer or
distributor; or
(4) by requiring  the  dealer  to  exclusively  promote  the  sale  of
extended  service  contracts,  extended  maintenance  plans  or  similar
products offered, endorsed or sponsored by the franchisor.
Nothing in this section shall prohibit a franchisor from:
(A) providing incentives to a dealer that makes the voluntary decision
to sell or sell  exclusively  an  extended  service  contract,  extended
maintenance  plan or similar product, including, but not limited to, gap
products offered, endorsed or sponsored by the franchisor, or
(B) requiring that a dealer that sells an extended  service  contract,
extended  maintenance  plan,  or  similar  product  that is not offered,
endorsed or sponsored by the franchisor, disclose to  the  consumer  the
disclosures  required  under section seven thousand nine hundred five of
the insurance  law,  and  a  separate  statement,  acknowledged  by  the
consumer,  that the extended service contract, extended maintenance plan
or similar  product  is  not  offered,  endorsed  or  sponsored  by  the
franchisor, if that is the case.
2.  It shall be unlawful for any franchisor, notwithstanding the terms
of any franchise contract:
(a)  To  refuse  to  deliver  in  reasonable  quantity  and  within  a
reasonable  time  after  receipt  of  a dealer's order to any franchised
motor vehicle dealer any vehicle covered  by  such  franchise  which  is
publicly  advertised  by  such  franchisor to be available for immediate
delivery.    Provided, however, the failure to deliver any motor vehicle
shall not be considered a violation of this article if such  failure  be
due  to  acts  of  God, work stoppages or delays due to strikes or labor
difficulties, freight  embargoes,  shortage  of  materials,  a  lack  of
manufacturing  capacity  or other causes over which the franchisor shall
have no control.
(b) To  directly  or  indirectly  coerce  or  attempt  to  coerce  any
franchised  motor  vehicle  dealer to enter into any agreement with such
franchisor or officer, agent or other representative thereof, or  to  do
any  other  act prejudicial to the monetary interests or property rights
of said dealer  by  threatening  to  terminate  said  dealer.  Provided,
however,  that  good faith notice to any franchised motor vehicle dealer
of said dealer's violation of any terms or provisions of such  franchise
shall not constitute a violation of this article.
(c)  (1)  To  condition  the  renewal or extension of a franchise on a
franchised motor vehicle dealer's substantial renovation of the dealer's
place of business or  on  the  construction,  purchase,  acquisition  or
rental of a new place of business by the franchised motor vehicle dealer
unless the franchisor has advised the franchised motor vehicle dealer in
writing  of  its  intent  to impose such a condition within a reasonable
time prior to the effective date of the  proposed  date  of  renewal  or
extension  (but  in  no  case  less  than  one  hundred eighty days) and
provided the franchisor demonstrates the need for  such  change  in  the
place  of  business and the reasonableness of such demand in view of the
need to service the public and the economic conditions existing  in  the
automobile  industry  at  the  time such action would be required of the
franchised motor vehicle dealer. As  part  of  any  such  condition  the
franchisor  shall  agree,  in  writing,  to  supply  the  dealer  with a
reasonable quantity and mix of additional new motor vehicles  which,  as
determined  by a reasonable analysis of market conditions, are projected
to meet the sales levels necessary to  support  the  increased  overhead
incurred  by  the  franchised  motor  vehicle  dealer  by reason of such
renovation, construction, purchase, acquisition or rental of a new place
of business.
(2) To require a franchised motor vehicle dealer  to  purchase  goods,
building  materials,  or  services  for  the dealer's place of business,
including, but  not  limited  to,  office  furniture,  design  features,
flooring,  and wall coverings, from a vendor chosen by the franchisor if
goods, building materials, or services of substantially similar  quality
and design are available from other sources, provided, however, that the
goods  or  building  materials  are  not  subject  to  the  franchisor's
intellectual property or  trademark  rights  and  the  franchised  motor
vehicle  dealer  has  received the franchisor's approval, which approval
may not be unreasonably withheld. Nothing in this subdivision  shall  be
construed  to  allow  a  franchised  motor  vehicle  dealer to impair or
eliminate a franchisor's intellectual property or trademark  rights  and
trade  dress  usage guidelines, or to impair other intellectual property
interests owned or controlled by the franchisor.
(3) Except as necessary to comply with a health or safety law,  or  to
comply  with  a  technology  requirement,  which is necessary to sell or
service a motor vehicle that the  franchised  motor  vehicle  dealer  is
authorized  or licensed by the franchisor to sell or service, to require
a franchised motor vehicle dealer to construct a new dealer facility  or
substantially  alter  or  remodel an existing dealer facility before the

date that is ten years after the date the construction of the new dealer
facility or such alteration or remodeling at that location was completed
and shall continue with any successor owner provided such owner has been
designated  and  approved  by the franchisor in the franchise agreement,
and such construction, alteration or remodeling  substantially  complied
with the franchisor's brand image standards or plans that the franchisor
provided  at  the  time  the construction, alteration, or remodeling was
completed.
(i) As used in this subparagraph, "substantially alter":
(A)  refers  to  an  alteration  that  has  a  major  impact  on   the
architectural  features, characteristics, or integrity of a structure or
lot; and
(B) does not include routine maintenance, such as  interior  painting,
reasonably  necessary  to  keep  a  dealership  facility  in  attractive
condition.
(ii) Nothing in this paragraph shall prohibit a franchisor from:
(A) continuing a facility improvement program that is in effect as  of
the effective date of this paragraph with more than one franchised motor
vehicle dealer in the state or to renewing or modifying such program; or
(B)  providing  lump  sum  or regularly-scheduled payments to assist a
franchised motor  vehicle  dealer  in  making  a  facility  improvement,
including  construction, alteration or remodeling, or installing signage
or a franchisor image element;
(C) providing reimbursement to a franchised motor  vehicle  dealer  on
reasonable,  written terms for a portion of the franchised motor vehicle
dealer's cost of making a facility improvement, including  construction,
alteration  or  remodeling, the purchase of goods, building materials or
services, or installing signage or a franchisor image element.
(4) To deny a franchised  motor  vehicle  dealer  a  franchisor  image
element  payment, incentive or allowance if the franchised motor vehicle
dealer, with the franchisor's approval, began construction,  alterations
or  remodeling  intended  to  comply with the franchisor's image element
program before the franchisor substantially changed  or  terminated  the
program prior to the program's scheduled ending date provided the dealer
is  otherwise eligible for program payments and provided that after such
substantial change or  termination,  the  compensation  payable  to  the
dealer  shall  be  limited  to  image  element  payments,  incentives or
allowances that the dealer would have earned through program's scheduled
ending  date,  provided  that  the  dealer  complies  with  all  program
requirements,  and  provided, further, that such program or payments are
not otherwise prohibited by law or regulation.
(5) To require or attempt to require a franchised motor vehicle dealer
to  establish  or  maintain  exclusive  dealership   facilities   unless
justified  by current and reasonably expected future economic conditions
existing in the dealer's relevant market area at the  time  the  request
for  exclusive facilities is made; provided that the foregoing shall not
restrict the terms and conditions of any agreement for which the  dealer
has  voluntarily  accepted  valuable  consideration  separate  from  the
franchised motor vehicle  dealer's  right  to  sell  and  service  motor
vehicles  for  the  franchisor. The fact that local market share, facing
competitive brand dealerships have exclusive dealership facilities shall
constitute evidence that current economic  conditions  may  justify  the
requirement to establish and maintain exclusive dealership facilities.
(6)  To  require a site control provision regarding the dealer's place
of business to  survive  or  continue  after  the  termination  of  such
dealer's  franchise  if the termination is due to the discontinuation of
the line-make that was the subject of the agreement.
(d) (1) To terminate, cancel or refuse to renew the franchise  of  any
franchised  motor vehicle dealer except for due cause, regardless of the
terms of the franchise. A franchisor shall  notify  a  franchised  motor
vehicle  dealer,  in  writing,  of its intention to terminate, cancel or
refuse to renew the franchise of such dealer at least ninety days before
the  effective  date  thereof,  stating  the  specific  grounds for such
termination, cancellation or refusal to renew. In  no  event  shall  the
term  of  any  such  franchise expire without the written consent of the
franchised motor vehicle dealer involved prior to the expiration  of  at
least  ninety  days  following such written notice except as hereinafter
provided.
(2) A change in  ownership  of  a  manufacturer  or  distributor  that
contemplates  a  continuation  of  that line make in the state shall not
directly  or  indirectly,  through  actions  of  any   parent   of   the
manufacturer   or   distributor,   subsidiary  of  the  manufacturer  or
distributor, or common entity  cause  a  termination,  cancellation,  or
nonrenewal  of  a dealer agreement by a present or previous manufacturer
or distributor of an  existing  agreement  unless  the  manufacturer  or
distributor  offers  the  new  vehicle dealer an agreement substantially
similar to that offered to other dealers of the same line make.
(3) The provisions of subparagraphs one  and  two  of  this  paragraph
notwithstanding,  a  franchisor  may  terminate  its  franchise  with  a
franchised motor vehicle dealer  upon  at  least  fifteen  days  written
notice  upon the occurrence of any of the following: (i) conviction of a
franchised motor vehicle dealer, or one of its principal  owners,  of  a
felony  or  a  crime  punishable  by  imprisonment  which  substantially
adversely affects the business of the franchisor, or (ii) the failure of
the franchised motor vehicle dealer to conduct its customary  sales  and
service  operations  for  a  continuous  period  of seven business days,
except for acts of God or circumstances beyond the direct control of the
franchised motor vehicle dealer or when  any  license  required  by  the
franchised motor vehicle dealer is suspended for a period of thirty days
or  less, or (iii) insolvency of the franchised motor vehicle dealer, or
filing of any petition by or against the franchised motor vehicle dealer
under any bankruptcy or receivership law.
(e) (1) Any franchised motor vehicle dealer  who  receives  a  written
notice  of termination or a written notice of a franchisor's demand that
the dealer substantially renovate an existing place of business, or buy,
construct or rent a new place of business as a  condition  of  franchise
renewal or extension may have a review of the demand to change the place
of  business  or the threatened termination by instituting an action, as
provided in section four hundred sixty-nine of  this  article.  If  such
action is commenced within four months of receipt of notice, such action
shall   serve  to  stay,  without  bond,  the  proposed  termination  or
renovation or demand to change the place of  business  until  the  final
judgment  has  been rendered in an adjudicatory proceeding or action, as
provided in section four hundred sixty-nine of this article.
(2) The issues to be determined in an  action  commenced  pursuant  to
subparagraph  one  of this paragraph are whether the franchisor's notice
of termination was issued with due cause and in good faith.  The  burden
of  proof  shall be upon the franchisor to prove that due cause and good
faith exist. The franchisor shall also have the burden of  proving  that
all  portions  of its current or proposed sales and service requirements
for the protesting franchised new motor vehicle dealer are reasonable.
The determination of due cause shall be that there exists  a  material
breach  by  a  new  motor  vehicle  dealer of a reasonable and necessary
provision of a franchise if the breach is not cured within a  reasonable

time  after  written  notice  of  the  breach has been received from the
manufacturer or distributor.
(3) The franchisor shall provide notification in writing to the dealer
that  the dealer has one hundred eighty days to correct dealer sales and
service performance deficiencies or breaches and that the  franchise  is
subject to termination under this section if the dealer does not correct
those  deficiencies  or  breaches.  If  the  termination  is  based upon
performance of the dealer in sales and service then there  shall  be  no
due  cause  if  the  dealer  substantially  complies with the reasonable
performance provisions of the franchise during such cure period and,  no
due  cause if the failure to demonstrate such substantial compliance was
due to factors which were beyond the control of such dealer.
(f) To  intentionally  resort  to  or  use  any  false  or  misleading
advertisements.
(g)  To  sell or offer to sell any new motor vehicle to any franchised
motor vehicle dealer at a lower actual price therefor  than  the  actual
price  offered to any other franchised 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 result  in  such
lesser actual price. Provided, however, the provisions of this paragraph
shall  not  apply to sales to a franchised motor vehicle dealer for: (i)
resale to any unit of government; or (ii) donation or use by said dealer
in a driver education program. This paragraph shall not be construed  to
prevent  the  offering of incentive programs or other discounts provided
such incentives or discounts are reasonably available to all  franchised
motor vehicle dealers in this state on a proportionately equal basis.
(h)  To  sell  or  offer  to sell any new motor vehicle to any person,
except a distributor, at a lower actual price therefor than  the  actual
price  offered  and charged to a franchised motor vehicle dealer for the
same model vehicle similarly equipped or to  utilize  any  device  which
results in such lesser actual price.
(i)  To  sell  or  offer  to  sell  parts  and/or  accessories  to any
franchised motor vehicle dealer at a lower actual  price  therefor  than
the  actual  price  offered to any other franchised motor vehicle dealer
for similar parts and/or  accessories  for  use  in  his  own  business.
Provided,  however,  that nothing herein contained shall be construed to
prevent a manufacturer  or  distributor,  or  any  agent  thereof,  from
selling to a franchised motor vehicle dealer, who operates and serves as
a wholesaler of parts and accessories, such parts and accessories as may
be  ordered by such franchised motor vehicle dealer for resale to retail
outlets at a  lower  actual  price  than  the  actual  price  offered  a
franchised  motor  vehicle  dealer  who  does  not operate or serve as a
wholesaler of  parts  and  accessories.  This  paragraph  shall  not  be
construed  to  prevent  the  offering  of  incentive  programs  or other
discounts provided the franchisor demonstrates that such  incentives  or
discounts  are  reasonably  available  to  all  franchised motor vehicle
dealers in the state on a proportionately equal basis.
(j) To prevent or attempt to prevent, by contract  or  otherwise,  any
franchised  motor  vehicle dealer from changing the capital structure of
its dealership, or the  means  by  or  through  which  it  finances  the
operation of its dealership, or finances the acquisition or retention of
inventory,  provided the dealer at all times meets any capital standards
agreed to between the dealer and the franchisor and as  applied  by  the
franchisor  to  all other comparable franchised motor vehicle dealers of
the franchisor located within the state.
(k) To unreasonably withhold consent to the sale  or  transfer  of  an
interest,  in  whole  or  in  part,  to any other person or party by any
franchised motor vehicle dealer or any partner  or  stockholder  of  any

franchised  motor  vehicle  dealer.  If such consent to sale or transfer
shall be withheld  by  the  franchisor,  the  franchisor  shall  provide
specific  reasons  for  its  withholding of consent within sixty days of
receipt  of  the  request  for  such  consent  provided  such request is
accompanied by proper documentation as may reasonably be required by the
franchisor. Upon receipt of notice  and  reasons  for  the  franchisor's
withholding  of  consent, the franchised motor vehicle dealer may within
one hundred twenty days have a review of the manufacturer's decision  as
provided in section four hundred sixty-nine of this article.
(l)  To  require  a  franchised  motor  vehicle  dealer to assent to a
release, assignment, novation, waiver or estoppel  which  would  relieve
any person from liability imposed under this article, provided that this
paragraph  shall  not be construed to prevent a franchised motor vehicle
dealer from entering into a valid release or settlement agreement with a
franchisor.
(m) (1) To deny to the surviving spouse  or  heirs  of  an  individual
franchised  motor  vehicle  dealer  or of a partner of an unincorporated
franchised motor vehicle dealer or  of  a  stockholder  of  a  corporate
franchised  motor vehicle dealer the right to succeed to the interest of
the decedent in such franchised motor vehicle dealership  enterprise  or
directly  or  indirectly  to  interfere  with,  hinder  or  prevent  the
continuance of the business of the franchised motor  vehicle  dealer  by
reason  of  such  succession  to the interest of the decedent. Provided,
however, that the continuation of the business of the  franchised  motor
vehicle  dealer shall be conducted under competent management acceptable
to the franchisor, whose acceptance shall not be unreasonably withheld.
(2) Notwithstanding the foregoing, in the event the  franchised  motor
vehicle dealer and franchisor have duly executed an agreement concerning
succession  rights  prior  to  the  individual  dealer's,  partner's  or
stockholder's death and if such agreement has not been  revoked  by  the
franchised  motor vehicle dealer, such agreement shall be observed, even
if it designates an individual other than the surviving spouse or  heirs
of the decedent.
(n)  To  fail  to  indemnify  and  hold  harmless its franchised motor
vehicle dealers against any losses or damages including, but not limited
to, court costs and attorneys' fees arising out of  actions,  claims  or
proceedings  including,  but  not  limited  to,  those based upon strict
liability,  negligence,  misrepresentation,   warranty   (expressed   or
implied)  or  revocation  as  described  in section 2-608 of the uniform
commercial code, where the action, claim or proceeding directly  relates
to  the  manufacture, assembly or design of new motor vehicles, parts or
accessories or other functions  of  the  franchisor  including,  without
limitation,  the  selection by the franchisor of parts or components for
the vehicle or any damages  to  merchandise  or  vehicles  occurring  in
transit   where   the   carrier   is   designated   by  the  franchisor,
notwithstanding the terms of any franchise.  If  the  action,  claim  or
proceeding includes independent allegations against the franchised motor
vehicle  dealer,  the  franchisor  shall  bear  only that portion of the
costs, fees and judgment which is directly related to  the  manufacture,
assembly  or  design  of  the  vehicle,  parts  or accessories, or other
function of the franchisor beyond the control of  the  franchised  motor
vehicle dealer.
(o)  (1)  Upon  a  termination  of  a  franchise  by  a  franchisor or
franchised motor vehicle dealer under this article, to refuse to  accept
a  return  of new and unused current model motor vehicle inventory which
has been acquired from the franchisor, new and unused  noncurrent  model
motor  vehicle  inventory  which  has  been acquired from the franchisor
within one hundred eighty days of the effective date of the termination;

supplies, parts, equipment,  signage,  special  tools,  and  furnishings
purchased from the franchisor or its approved sources. The obligation of
the  franchisor,  except with respect to signage shall be limited to the
repurchase  of  the  above property which is unaltered and undamaged, in
good and useable condition, and, in the  case  of  supplies,  parts  and
equipment  to those items which are currently listed in the franchisor's
supplies and parts list. In the case of signage, the franchisor shall be
obligated to  repurchase  any  franchisor  required  signage,  purchased
within  the  five  years  preceding termination and which is in good and
useable condition less depreciation as set forth in the Internal Revenue
Code of one-fifteenth of the initial cost per  year  starting  the  year
following  the  dealer's  acquisition  of  the  item.  Furthermore,  the
obligation of the franchisor to repurchase supplies upon a  termination,
cancellation or nonrenewal by a franchised motor vehicle dealer shall be
limited  to  supplies  mandated  by  the  franchisor. Parts eligible for
repurchase shall include parts which have been renumbered in the current
parts list but which  are  identical  in  design  and  material  to  the
currently numbered part. The return rights afforded the franchised motor
vehicle  dealer  under  the  provisions  of  the  paragraph  shall be in
addition to those, if any, provided in the franchise agreement.
(2) The franchisor shall pay fair and reasonable compensation for  the
above  described  property  upon  repurchase.  In  the case of new motor
vehicle  inventory,  accessories  and   parts,   fair   and   reasonable
compensation shall in no instance be less than the net acquisition price
paid  by  the  franchised  motor vehicle dealer to the franchisor or its
approved sources. Upon a termination of a  franchise  by  a  franchisor,
within thirty days of such termination, the franchisor shall send to the
franchised motor vehicle dealer instructions on the methodology by which
the  franchised  motor  vehicle  dealer  must  ship  the above described
property to the franchisor; the franchisor shall then remit payment  for
such  property  to the franchised motor vehicle dealer within sixty days
after receipt of such property.
(3) Upon a termination of a franchise by a  franchised  motor  vehicle
dealer  where  the  franchise consists primarily of the distribution and
sale of house coaches, the franchisor's repurchase obligations set forth
in this paragraph shall not apply.
(4) In addition to any other requirements of this subdivision, in  the
event  a  franchisor terminates a franchise due to termination of a line
make, the franchisor shall compensate  the  dealer  for  any  franchisor
required   facility   construction,   alterations   or   remodeling,  or
construction, alterations or remodeling required  for  participation  in
any  incentive  programs which were completed by the dealer within three
years of the date the franchisor announced the termination of  the  line
make.  For  the  purposes of this section, completion shall be deemed to
occur  at  the  later  of  the  franchisor's  final  approval   of   the
construction,   alterations,   or   remodeling  or  the  issuance  of  a
certificate of occupancy. The compensation required under  this  section
shall  be  in  an  amount  equal  to  the dealer's cost for the facility
upgrades less any assistance provided to the dealer within  three  years
of the date the franchisor announced the termination of the line make by
the manufacturer or distributor, and less the amount for depreciation as
set  forth  in  Internal  Revenue  Code of one thirty-ninth of the total
initial cost of such construction, alterations, or remodeling  per  year
starting  the  year  following  the  dealer's completion of the facility
construction, alterations, or remodeling.
(5) In addition to the  requirements  of  subparagraph  four  of  this
paragraph,  in  the  event  a franchisor terminates a franchise due to a
termination of a line make, the franchisor shall compensate  the  dealer

in  an  amount  equal to the amount remaining on the terminated dealer's
management computer system lease or  contract,  or  one  year  of  lease
payments,  whichever  is  less  if the dealer management computer system
will  no  longer  be  utilized  as  a  result of the termination and the
franchisor  required  the  dealer  to  utilize  the  particular   dealer
management computer system.
(p)  To  refuse  to  repurchase  for  cost,  including  transportation
charges, a new vehicle which  has  been  substantially  damaged  by  the
franchisor  or  its  agent; or to sell or transfer to a franchised motor
vehicle dealer a new motor vehicle which has been subjected  to  repairs
with  a  retail  value  in  excess  of five percent of the lesser of the
manufacturer's  or  distributor's  suggested  retail  price  where  such
repairs  are  performed  after  shipment  from  the franchisor including
damage to  the  vehicle  while  in  transit  without  so  notifying  the
franchised  motor  vehicle  dealer  to  whom  such  new motor vehicle so
repaired is sold or transferred. Such notice shall be in writing, advise
of such repairs, and be provided prior to the receipt of any payment for
such motor vehicle. If the franchisor shall fail to provide such notice,
any franchised motor vehicle dealer suffering a loss by reason  of  such
failure  shall  be  entitled  to  reimbursement  from the franchisor who
failed to provide such notice.
(q) To provide directly or to grant to any person the right to perform
warranty or recall service on any new motor vehicle line  other  than  a
house coach line but deny to said person the right to purchase the motor
vehicles of that line for resale to consumers in this state as new motor
vehicles  provided,  however,  that  this paragraph shall not prohibit a
franchisor from:
(1) authorizing warranty service by employees of a fleet  operator  or
governmental entity on owned vehicles; or
(2)  authorizing such other persons to perform warranty service as the
franchisor deems necessary to protect  its  interests  as  they  may  be
affected  by  section one hundred ninety-eight-a of the general business
law.
A "fleet operator" shall be required to own for its own use or for the
use of others the minimum number of vehicles of the current or preceding
model year manufactured or sold by the same franchisor as determined  by
the  standards  of  such  franchisor applied on a general and consistent
basis  to  substantially  all  fleet  operators.   Notwithstanding   the
preceding,  a  franchisor  which withdraws from the United States market
shall continue to allow its former franchised motor vehicle  dealers  to
continue  servicing  and  supplying  parts,  including service and parts
supplied under the franchisor's warranty to vehicle owners, for a period
of at least five years after such  withdrawal  from  the  United  States
market.
(r)  To  establish or attempt to establish the actual resale price for
any new motor vehicle, part or accessory charged by a  franchised  motor
vehicle dealer in the state, provided, however, nothing contained herein
shall  prohibit  publication  of recommended resale prices or historical
information by a franchisor.
(s) To grant a commission to any person other than a franchised  motor
vehicle  dealer  within  the  state  involved in the sale of a new motor
vehicle by such franchised motor vehicle dealer without said  franchised
motor vehicle dealer's written consent. This prohibition shall not apply
to  sales  incentive  programs for employees of franchised motor vehicle
dealers as long as the payments are  made  by  the  franchisor  to  such
employees and not charged to the dealer.
(t)  To  require  or  attempt to require by the terms of the franchise
that  any  dispute  arising  out  of   or   in   connection   with   the

interpretation,  performance  or  nonperformance  of  the parties to the
franchise or in any way related to the franchise be  determined  through
the application of any other state's laws.
(u) To use any subsidiary corporation, affiliated corporation, captive
finance   source  or  any  other  controlled  corporation,  partnership,
association or person to accomplish what  would  otherwise  be  unlawful
conduct under this article on the part of the franchisor.
(v)  To  use  a  CSI  (customer  satisfaction  index)  or other system
measuring a customer's degree of satisfaction with  a  franchised  motor
vehicle  dealer  as a sale or service provider unless any such system is
designed and implemented in such a way that it is fair and equitable  to
both  the  franchisor  and  the  franchised motor vehicle dealer. In any
dispute between a franchisor and a franchised motor vehicle  dealer  the
party  claiming  the  benefit of the system as justification for acts in
relation to the franchise shall have the  burden  of  demonstrating  the
fairness  and  equity of the system both in design and implementation in
relation to the pending dispute. Upon request of  any  franchised  motor
vehicle  dealer, a franchisor shall disclose in writing to such dealer a
description of how that system is designed and all relevant  information
pertaining to such dealer used in the application of that system to such
dealer.
(w)  To  withhold  from  a franchised motor vehicle dealer a new motor
vehicle product of the same line make which the franchised motor vehicle
dealer is authorized to sell under  its  franchise.  Provided  that  the
failure  to  deliver  any  motor vehicle shall not be considered to be a
violation of this article if such failure is due to an act of God,  work
stoppages  or  delays  due  to  strikes  or  labor difficulties, freight
embargoes, shortages of materials, a lack of manufacturing capacity,  or
other  causes  over  which  the  franchisor  shall  have  no  control. A
franchised motor vehicle dealer shall be entitled to  sell  and  service
all  the  manufacturer's  new  motor vehicles which the franchised motor
vehicle  dealer  is  authorized  to  sell  pursuant  to  the  franchise,
provided, however, a franchisor may impose reasonable facility, capital,
training,  tools  and parts inventory requirements as a condition to the
franchised motor vehicle dealer being permitted to sell such  new  motor
vehicle   products.  Conditions  imposed  by  the  franchisor  shall  be
reasonably applied to all  of  its  franchised  motor  vehicle  dealers.
Franchised  motor  vehicle  dealers  who  are  presently  parties  to  a
franchise with the franchisor shall be offered the  right  to  sell  and
service  any  new  motor  vehicle product of the same line make owned or
generally distributed by  such  franchisor's  franchised  motor  vehicle
dealer  within such franchised motor vehicle dealer's designated area of
responsibility designated in the franchise agreement before  any  person
not  a  party  to such a franchise for the sale of motor vehicles within
such area of responsibility is offered or granted a  franchise  to  sell
such  new  motor  vehicle  product  from  a location within such area of
responsibility.
(x) To require a franchised motor vehicle dealer to agree to a term or
condition in a franchise, or as a  condition  to  the  offer,  grant  or
renewal of the franchise, lease or agreement, which:
(1)  unless  preempted  by  federal law, requires the franchised motor
vehicle  dealer  to  waive  trial  by  jury  in  actions  involving  the
franchisor; or
(2)  unless  preempted  by  federal  law,  specifies the jurisdiction,
venues or tribunals in  which  disputes  arising  with  respect  to  the
franchise,  lease  or  agreement  shall  or  shall  not be submitted for
resolution or otherwise prohibits a franchised motor vehicle dealer from
bringing an action in a particular forum otherwise available.
(y) Subject to the provisions of paragraph (w) of this subdivision, to
sell or offer to sell or lease or offer to lease a motor  vehicle  other
than  to  a  franchised  motor  vehicle  dealer in this state; provided,
however, that this paragraph shall not apply to sales or leases  of  new
motor  vehicles  made by a franchisor to its employees, immediate family
members of employees, retirees or immediate family members  of  retirees
which  are  hereby  authorized notwithstanding the provisions of section
four hundred fifteen of this title.  Nothing  in  this  paragraph  shall
prohibit  a  franchisor  from  utilizing  direct  marketing  designed to
generate leads via mail, phone, or any other medium, provided that leads
developed thereby are referred to the franchised motor  vehicle  dealers
in  this  state  and in proximity to the consumer pursuant to a fair and
equitable system of allocating such leads or  to  the  franchised  motor
vehicle  dealer  as  specified  by  the consumer. The provisions of this
paragraph shall not apply to  franchisors  of  house  coaches  when  the
franchisor  does  not  have  any  franchised house coach dealers in this
state.
(z) To refuse to allocate, sell, or deliver motor vehicles, to  charge
back  or  withhold  payments  or  other  things  of  value for which the
franchisee is otherwise eligible, or to take or  threaten  to  take  any
adverse  action against a franchised motor vehicle dealer, in connection
with or as a result of any new motor  vehicle  sold  by  the  franchised
motor  vehicle  dealer  and subsequently exported, providing such dealer
can demonstrate that he exercised due diligence and that  the  sale  was
made in good faith including that the dealer did not know nor reasonably
should  have  known  of  the  purchaser's  intention to export the motor
vehicle. A franchised motor vehicle dealer  which  causes  a  new  motor
vehicle  to be registered in this state or in a foreign state and causes
to be collected the appropriate sales and use tax,  or  that  reasonably
relied  on  a  franchisor  to  complete a sale shall be presumed to have
exercised good faith and due  diligence.  Prior  to  taking  an  adverse
action,  including a charge back, as a result of an export, a franchisor
shall provide written notice to the franchised motor vehicle  dealer  of
the  adverse  action,  and, if a charge back, the specific amount of the
charge back, and the vehicle or vehicles at issue. A dealer shall not be
liable for the delivery of any vehicle sold through a franchisor's fleet
program for any such delivery  in  which  the  sale  or  lease  was  not
initiated  or  negotiated  by the dealer and its function was to provide
delivery on behalf of the franchisor.
(aa) To: (1) sell directly to a franchised motor vehicle dealer or, to
or through a franchised motor vehicle dealer  in  which  the  franchisor
owns  any  interest  or controls the management, directly or indirectly,
motor vehicles, parts, warranties, or services at a price that is  lower
than  the  price  which  the  franchisor charges to all other franchised
motor vehicle dealers; or
(2) sell directly to a  consumer  at  retail  new  original  equipment
manufacturer's parts (OEM) at a price that is lower than the price which
the franchisor makes available to franchised motor vehicle dealers; or
(3)  otherwise  provide a franchised motor vehicle dealer in which the
franchisor owns any interest or controls  the  management,  directly  or
indirectly,  goods  or  services at a price that is lower than the price
charged to all other franchised motor vehicle dealers.
(bb) On and after the effective date of this paragraph, to acquire any
interest in any additional motor vehicle dealer in this state, with  the
exception  of  stock in a publicly held dealer when ownership is passive
and for investment purposes only; provided,  however,  that  nothing  in
this  paragraph  shall prohibit a franchisor and its affiliates that own
an interest in a franchised motor vehicle dealership that operates or is

approved to operate, within one hundred twenty days after the  effective
date of this paragraph, from selling or servicing a new line make of the
franchisor  or  its affiliates that was not distributed in this state as
of the effective date of this paragraph. Provided, further, that nothing
in  this  paragraph  shall  prohibit  a  franchisor  from  acquiring any
interest in any franchised motor vehicle dealership:
(1) when operating such franchise  for  a  temporary  period,  not  to
exceed  one  year,  during  the  transition  from one owner of the motor
vehicle dealership to another, provided, however,  that  such  temporary
period  may  be extended once for an additional period not to exceed one
year for good cause. Provided that for franchisors of house coaches, the
period of temporary ownership of a franchised house coach dealership may
be extended in one year increments for good cause shown, except that the
aggregate of such extensions shall not exceed five years; or
(2) when operating such franchise temporarily under  a  plan  with  an
independent individual who is obligated to make a significant investment
in  the dealership that is subject to loss and has an ownership interest
or expects to acquire  full  ownership  in  a  reasonable  period  under
reasonable terms and conditions, provided that a reasonable period shall
be  presumed  to  not  exceed  eight  years; provided, however, that the
exception  provided  in  this  subparagraph  shall  not  apply  to   any
franchisor,  manufacturer,  distributor,  distributor  branch or factory
branch that holds a certificate or registration pursuant to subparagraph
(iii) of paragraph f  of  subdivision  seven  of  section  four  hundred
fifteen of this title.
(cc)(1) To enter into a franchise establishing an additional new motor
vehicle  dealer  or relocating an existing new motor vehicle dealer into
the relevant market area of an existing franchise motor  vehicle  dealer
of  the same line make unless the franchisor provides notice pursuant to
the terms of this subdivision. All dealers that have a  relevant  market
area  that  encompasses  the  proposed site shall be entitled to written
notice, via certified mail return receipt requested, informing  them  of
the  proposed  addition  or relocation. Any new motor vehicle dealer may
institute an action as provided in section four  hundred  sixty-nine  of
this article to protest the establishment or relocation of the new motor
vehicle dealer following receipt of such notice, or following the end of
any  appeal  procedure provided by the franchisor. In any action brought
by the dealer, the franchisor shall have  the  burden  of  proving  that
there exists good cause for any such addition or relocation. Institution
of  an  action pursuant to this subdivision shall serve to stay, without
bond, the proposed addition or relocation until  a  final  judgment  has
been  rendered  in  a  proceeding  or action as provided in section four
hundred sixty-nine of this article.
(2) This subdivision shall not apply to:
(i) the relocation or replacement,  other  than  a  replacement  of  a
dealer  who has moved within such area, of an existing new motor vehicle
dealer within that dealer's own existing relevant market area,  provided
that  the relocation not be to a site within the relevant market area of
a licensed new motor vehicle dealer for the  same  line  make  of  motor
vehicle,  unless  such  existing franchise was previously located within
such new motor vehicle dealer's relevant market area; or
(ii) the addition of a new motor vehicle dealer or  the  establishment
of a replacement new motor vehicle dealer, other than a replacement of a
dealer  who  has  moved  within  such  area, at or within two miles of a
location at which a former licensed new motor  vehicle  dealer  for  the
same  line  make  of  new  motor vehicle had ceased operating within the
previous two years; or
(iii) the relocation of an existing new motor  vehicle  dealer  within
two  miles  of  the existing site of the new motor vehicle dealership if
the franchise has been operating on a regular basis  from  the  existing
site  for a minimum of three years immediately preceding the relocation;
or
(iv)  the  relocation  of  a new motor vehicle dealer of the same line
make if that dealer or replacement dealer is moving further away from  a
motor vehicle dealer of of the same line make.
(3)  In  determining  whether  good cause has been established for not
entering into or relocating an additional new motor vehicle  dealer  for
the  same  line make, there shall be individual findings with respect to
the following:
(i) the permanency of the investment of both the existing and proposed
additional new motor vehicle dealers;
(ii) growth or decline in population, density of population,  and  new
car registrations in the area;
(iii) effect on the consuming public in the area;
(iv)  whether  it is injurious or beneficial to the public welfare for
an additional new motor vehicle dealer to be established;
(v) whether the new motor vehicle dealers of the  same  line  make  in
that  area  are  providing  adequate competition and convenient customer
care for the motor vehicles of the same line make including the adequacy
of motor vehicle sales and  service  facilities,  equipment,  supply  of
motor vehicle parts, and qualified service personnel;
(vi)  whether  the  establishment  of  an additional new motor vehicle
dealer or relocation of an existing new  motor  vehicle  dealer  in  the
relevant  market  area would increase competition in a manner beneficial
to the long-term public interest;
(vii) the effect on the dealer that proposed to relocate; and
(viii) any other factor which may be deemed material by the finder  of
fact to the unique facts and circumstances presented.
(dd)  To unreasonably prevent or refuse to approve the relocation of a
dealership to another site  within  that  dealership's  relevant  market
area.  The  dealership  must  provide prior written notice providing the
address of the proposed new location and a site  plan  of  the  proposed
facility.  The  franchisor  must,  within  sixty days of receipt of such
information, grant or deny the dealer's relocation request.  Failure  to
timely deny the request shall be deemed consent to the relocation.
(ee)  To  fail  to  reimburse  a dealer in full for the actual cost of
providing a loaner vehicle to any  customer  who  is  having  a  vehicle
serviced  at the dealership if the provision of such a loaner vehicle is
required by the franchisor. For the purposes of this  paragraph,  actual
cost  shall  not  exceed the average cost in the dealer's region for the
rental of a substantially similar make and model as  the  vehicle  being
serviced.
(ff)(1) To modify the franchise of any franchised motor vehicle dealer
unless  the  franchisor notifies the franchised motor vehicle dealer, in
writing, of its intention to modify the  franchise  of  such  dealer  at
least  ninety  days  before  the  effective  date  thereof,  stating the
specific grounds for such modification.
(2)  For  purposes  of  this   paragraph,   the   term   "modify"   or
"modification"  means any change or replacement of any franchise if such
change or replacement may substantially and  adversely  affect  the  new
motor  vehicle  dealer's  rights,  obligations,  investment or return on
investment.
(3) If any franchised motor vehicle  dealer  who  receives  a  written
notice  of  modification  institutes an action within one hundred twenty
days of receipt of such notice  as  provided  in  section  four  hundred

sixty-nine   of  this  article  to  have  a  review  of  the  threatened
modification, such  action  shall  serve  to  stay,  without  bond,  the
proposed  modification  until  a  final judgment has been rendered in an
adjudicatory  proceeding  or  action as provided in section four hundred
sixty-nine of this article. A modification is deemed unfair if it is not
undertaken in good faith; is not undertaken for  good  cause;  or  would
adversely and substantially alter the rights, obligations, investment or
return  on  investment  of  the franchised motor vehicle dealer under an
existing franchise agreement. In any action brought by the  dealer,  the
franchisor  shall  have  the burden of proving that such modification is
fair and not prohibited.
(gg) To use an  unreasonable,  arbitrary  or  unfair  sales  or  other
performance  standard in determining a franchised motor vehicle dealer's
compliance with  a  franchise  agreement.  Before  applying  any  sales,
service  or  other  performance  standard  to a franchised motor vehicle
dealer, a franchisor  shall  communicate  the  performance  standard  in
writing in a clear and concise manner.
(hh)  To  require  that  a  franchised motor vehicle dealer contribute
monetarily to any program  or  promotion  without  first  receiving  the
written consent of the franchised motor vehicle dealer to participate in
such  program  or promotion. For purposes of this paragraph, the written
consent  specific  to  the  particular  program  or  promotion  must  be
executed, by means of handwritten, typed or electronic signature, within
sixty  days  prior  to the start of the particular program or promotion,
provided, however, that  consent  shall  not  be  required  to  continue
participation  in  a  program or promotion to which the dealer has given
written consent to renewal, and provided further, that the dealer  shall
be  able to terminate such renewal upon reasonable written notice within
thirty days following the start or renewal of the program or promotion.
(ii) To allocate new motor vehicles  to  a  franchised  motor  vehicle
dealer based on a program that differentiates between vehicle sales by a
franchised  motor  vehicle  dealer within a territory or geographic area
assigned to such dealer and vehicle sales outside of such  territory  or
geographic area.
(jj)  To  utilize  a discriminatory, unreasonable, arbitrary or unfair
system of allocation of new motor vehicle inventory. A franchisor  shall
communicate  its  system of allocation in writing in a clear and concise
manner to all same line-make dealers located in this state.
(kk) To refuse to disclose to any franchised motor vehicle dealer  the
manner  and  mode  of  distribution  of vehicles in the franchised motor
vehicle dealer's line make within the state, and an explanation  of  the
allocation  system,  including  the  methodology  used,  in  a clear and
comprehensible form.
2-a. On and after  the  effective  date  of  this  subdivision,  if  a
franchisor  notifies  a  franchised motor vehicle dealer, in writing, of
its decision to monitor the continued viability of the  dealership,  the
franchisor  shall include in such notice the specific reasons upon which
the franchisor's decision is based.
2-b. It shall be unlawful for  any  franchisor  to  provide  financial
information  particular  to a franchised motor vehicle dealer, including
but not limited to, selling prices and  sales  margins,  that  has  been
collected  from  such  franchised  motor  vehicle  dealer  to  any other
franchised motor vehicle dealer including  a  franchised  motor  vehicle
dealer  in  which the franchisor owns any interest or controls, directly
or  indirectly,  the  management  thereof.  Nothing  contained  in  this
subdivision  shall  be  deemed to prevent any franchisor from collecting
and distributing any such financial information in an  aggregate  manner
provided  that  the  information  from any motor vehicle dealer has been

combined with the information from one or more franchised motor  vehicle
dealers  such that the financial information from a particular dealer is
no longer identifiable to such dealer.
3.  In  any action or proceeding instituted pursuant to the provisions
of this section, there shall be available to the franchisor all  of  the
defenses  provided for under section thirteen-b of title fifteen, United
States code, known as the Robinson-Patman Act.