2023 Oklahoma Statutes › Title 47. Motor Vehicles › §47-565.2. Termination, cancellation or nonrenewal of new motor vehicle dealer franchise.

A. Irrespective of the terms, provisions, or conditions of any franchise, or the terms or provisions of any waiver, no manufacturer shall terminate, cancel, or fail to renew any franchise with a licensed new motor vehicle dealer unless the manufacturer has satisfied the notice requirements as provided in this section and has good cause for cancellation, termination, or nonrenewal. The manufacturer shall not attempt to cancel or fail to renew the franchise agreement of a new motor vehicle dealer in this state unfairly and without just provocation or without due regard to the equities of the dealer or without good faith as defined herein. As used herein, “good faith” means the duty of each party to any franchise agreement to act in a fair and equitable manner toward each other, with freedom from coercion or intimidation or threats thereof from each other.
B. Irrespective of the terms, provisions, or conditions of any franchise, or the terms or provisions of any waiver, good cause shall exist for the purpose of a termination, cancellation, or nonrenewal when:
1. The new motor vehicle dealer has failed to comply with a provision of the franchise, which provision is both reasonable and of material significance to the franchise relationship, or the new motor vehicle dealer has failed to comply with reasonable performance criteria for sales or service established by the manufacturer, and the new motor vehicle dealer has been notified by written notice from the manufacturer; and
2. The new motor vehicle dealer has received written notification of failure to comply with the manufacturer’s reasonable sales performance standards, capitalization requirements, facility commitments, business-related equipment acquisitions, or other such remediable failings exclusive of those reasons enumerated in paragraph 1 of subsection C of this section, and the new motor vehicle dealer has been afforded a reasonable opportunity of not less than six (6) months to comply with such a provision or criteria.
C. Irrespective of the terms, provisions, or conditions of any franchise agreement prior to the termination, cancellation, or nonrenewal of any franchise, the manufacturer shall furnish notification of such termination, cancellation, or nonrenewal to the new motor vehicle dealer and the Oklahoma New Motor Vehicle Commission as follows:
1. Not less than ninety (90) days prior to the effective date of the termination, cancellation, or nonrenewal unless for a cause described in paragraph 2 of this subsection;
2. Not less than fifteen (15) days prior to the effective date of the termination, cancellation, or nonrenewal with respect to any of the following:
a.
insolvency of the new motor vehicle dealer, or the filing of any petition by or against the new motor vehicle dealer under any bankruptcy or receivership law,
b.
failure of the new motor vehicle dealer to conduct its customary sales and service operations during its customary business hours for seven (7) consecutive business days, provided that such failure to conduct business shall not be due to an act of God or circumstances beyond the direct control of the new motor vehicle dealer, or
c.
conviction of the new motor vehicle dealer of any felony which is punishable by imprisonment or a violation of the Federal Odometer Act; and
3. Not less than one hundred eighty (180) days prior to the effective date of the termination or cancellation where the manufacturer or distributor is discontinuing the sale of the product line.
The notification required by this subsection shall be by certified mail, return receipt requested, and shall contain a statement of intent to terminate, to cancel, or to not renew the franchise, a statement of the reasons for the termination, cancellation, or nonrenewal and the date the termination shall take effect.
D. Upon the affected new motor vehicle dealer’s receipt of the aforementioned notice of termination, cancellation, or nonrenewal, the new motor vehicle dealer shall have the right to file a protest of such threatened termination, cancellation, or nonrenewal with the Commission within thirty (30) days and request a hearing. The hearing shall be held within one hundred eighty (180) days of the date of the timely protest by the dealer and in accordance with the provisions of the Administrative Procedures Act, Sections 250 through 323 of Title 75 of the Oklahoma Statutes, to determine if the threatened cancellation, termination, or nonrenewal of the franchise has been for good cause and if the factory has complied with its obligations pursuant to subsections A, B, and C of this section and the factory shall have the burden of proof. Either party may request an additional one-hundred-eighty-day extension of the hearing date from the Commission. Approval of the requested extension may not be unreasonably withheld or delayed. If the Commission finds that the threatened cancellation, termination, or nonrenewal of the franchise has not been for good cause or violates subsection A, B, or C of this section, then it shall issue a final order stating that the threatened termination is wrongful. A factory shall have the right to appeal such order. During the pendency of the hearing and after the decision, the franchise shall remain in full force and effect, including the right to transfer the franchise. If the Commission finds that the threatened cancellation, termination, or nonrenewal is for good cause and does not violate subsection A, B, or C of this section, the new motor vehicle dealer shall have the right to an appeal. During the pendency of the action, including the final decision or appeal, the franchise shall remain in full force and effect, including the right to transfer the franchise. If the new motor vehicle dealer prevails in the threatened termination action, the Commission shall award to the new motor vehicle dealer the attorney fees and costs incurred to defend the action.
E. If the factory prevails in an action to terminate, cancel, or not renew any franchise, the new motor vehicle dealer shall be allowed fair and reasonable compensation by the manufacturer for:
1. New, current, and previous model year vehicle inventory which has been acquired from the manufacturer, and which is unused and has not been damaged or altered while in the new motor vehicle dealer’s possession;
2. Supplies and parts which have been acquired from the manufacturer, for the purpose of this section, limited to any and all supplies and parts that are listed on the current parts price sheet available to the new motor vehicle dealer;
3. Equipment and furnishings, provided the new motor vehicle dealer purchased them from the manufacturer or its approved sources; and
4. Special tools, with such fair and reasonable compensation to be paid by the manufacturer within ninety (90) days of the effective date of the termination, cancellation, or nonrenewal, provided the new motor vehicle dealer has clear title to the inventory and other items and is in a position to convey that title to the manufacturer.
a.
For the purposes of paragraph 1 of this subsection, fair and reasonable compensation shall be no less than the net acquisition price of the vehicle paid by the new motor vehicle dealer.
b.
For the purposes of paragraphs 2, 3, and 4 of this subsection, fair and reasonable compensation shall be the net acquisition price paid by the new motor vehicle dealer less a twenty-percent (20%) straight-line depreciation for each year following the dealer’s acquisition of the supplies, parts, equipment, furnishings, and/or special tools.
F. If a factory prevails in an action to terminate, cancel, or not renew any franchise and the new motor vehicle dealer is leasing the dealership facilities, the manufacturer shall pay a reasonable rent to the lessor in accordance with and subject to the provisions of subsection G of this section. Nothing in this section shall be construed to relieve a new motor vehicle dealer of its duty to mitigate damages.
G. 1. Such reasonable rental value shall be paid only to the extent the dealership premises are recognized in the franchise and only if they are:
a.
used solely for performance in accordance with the franchise. If the facility is used for the operation of more than one franchise, the reasonable rent shall be paid based upon the portion of the facility utilized by the franchise being terminated, canceled, or nonrenewed, and
b.
not substantially in excess of facilities recommended by the manufacturer.
2. If the facilities are owned by the new motor vehicle dealer, within ninety (90) days following the effective date of the termination, cancellation, or nonrenewal, the manufacturer will either:
a.
locate a qualified purchaser who will offer to purchase the dealership facilities at a reasonable price,
b.
locate a qualified lessee who will offer to lease the premises for the remaining lease term at the rent set forth in the lease, or
c.
failing the foregoing, lease the dealership facilities at a reasonable rental value for the portion of the facility that is recognized in the franchise agreement for one (1) year.
3. If the facilities are leased by the new motor vehicle dealer, within ninety (90) days following the effective date of the termination, cancellation, or nonrenewal the manufacturer will either:
a.
locate a tenant or tenants satisfactory to the lessor, who will sublet or assume the balance of the lease,
b.
arrange with the lessor for the cancellation of the lease without penalty to the new motor vehicle dealer, or
c.
failing the foregoing, lease the dealership facilities at a reasonable rent for the portion of the facility that is recognized in the franchise agreement for one (1) year.
4. The manufacturer shall not be obligated to provide assistance under this section if the new motor vehicle dealer:
a.
fails to accept a bona fide offer from a prospective purchaser, sublessee, or assignee,
b.
refuses to execute a settlement agreement with the lessor if such agreement with the lessor would be without cost to the new motor vehicle dealer, or
c.
fails to make written request for assistance under this section within ninety (90) days after the effective date of the termination, cancellation, or nonrenewal.
5. The manufacturer shall be entitled to occupy and use any space for which it pays rent required by this section.
H. In addition to the repurchase requirements set forth in subsections E and G of this section, in the event the termination or cancellation is the result of a discontinuance of a product line, the manufacturer or distributor shall compensate the new motor vehicle dealer in an amount equivalent to the fair market value of the terminated franchise as of the date immediately preceding the manufacturer’s or distributor’s announcement or provide the new motor vehicle dealer with a replacement franchise on substantially similar terms and conditions as those offered to other same line-make dealers. The new motor vehicle dealer may immediately request payment under this section following the announcement in exchange for canceling any further franchise rights, except payments owed to the new motor vehicle dealer in the ordinary course of business, or may request payment under this section upon the final termination, cancellation, or nonrenewal of the franchise. In either case, payment under this section shall be made not later than ninety (90) days after the fair market value is determined. If the factory and new motor vehicle dealer cannot agree on the fair market value of the terminated franchise or agree to a process to determine the fair market value, then the factory and new motor vehicle dealer shall utilize a neutral third-party mediator to resolve the disagreement.
Added by Laws 1985, c. 229, § 10, eff. Nov. 1, 1985. Amended by Laws 2000, c. 341, § 3, eff. Nov. 1, 2000; Laws 2014, c. 402, § 3, eff. Nov. 1, 2014; Laws 2023, c. 29, § 10, eff. Nov. 1, 2023.