Ohio Motor Vehicle Dealer Franchise Law Updates Effective September 14, 2016
In late Spring the Ohio Legislature unanimously approved OADA-backed Senate Bill 242, sponsored by State Senate Joe Uecker (R-Miami Township) & State Senator Bill Coley (R-Liberty Township). This legislation, which was signed by Governor Kasich and is effective on September 14, 2016, makes the following updates to Ohio’s Motor Vehicle Dealer Franchise Law:
- Creates a preamble that recognizes the importance of a sound system of distributing and selling motor vehicles in the State of Ohio.
- Requires franchisors to consider “local market conditions” prior to taking adverse action against a franchisee.
- Creates a voluntary formula to set a minimum retail reimbursement rate for parts, labor, or parts and labor. A dealer may submit a certain number of nonwarranty repair orders to establish the rate. The formula excludes various repairs and parts from consideration, such as tires, accessories, and repairs for damage caused by collision. A franchisor may not retaliate against a dealer who chooses to utilize the formula.
- Prohibits a franchisor from requiring a dealer to conduct research on a prospective customer, especially with regard to the possible export of a vehicle, and clarifies that dealers are presumed to have not known that a vehicle was purchased for export under certain circumstances.
- Sets a seven-year minimum restriction on the amount of time between required facility alterations or upgrades while maintaining the requirement that the timing of any required alteration or upgrade must be reasonable with limited exceptions.
- Prohibits a franchisor from using the failure of a dealer to meet a performance standard as a justification for denying the dealer the opportunity to name a successor so long as the named successor meets the uniformly applied requirements to be a franchisee at the time of succession.
- Prohibits a franchisor from excluding a dealer from participating in a program offered by a franchisor based on the failure to sell an adequate number of vehicles when the failure to sell enough vehicles is due to the inability to obtain an adequate number of vehicles because of the actions of the franchisor.
- Allows a dealer to choose a vendor for construction or remodeling of a facility if the product or service is of substantially similar quality and general appearance as that required by the franchisor.
- Requires a franchisor to indemnify a dealer from all damages, attorney fees, and expenses that arise directly from the alleged improper use or disclosure of nonpublic, personal, customer information by a manufacturer, distributor, or any third party to whom the information was provided.
Dealers who were unable to participate in the OADA webinars that provided an overview of this legislation as well as discussed the warranty reimbursement provision in more detail may access them by contacting DeAnna Zahniser at OADA at dzahniser@oada.com
OADA would like to thank the dealers and the metro auto association executives who contacted legislators during debate on this important legislation. Active participation in our legislative grassroots program and the Dealers Investment Group (DIG) remain key to our success at the Statehouse.
Dealers may contact Zach Doran at zdoran@oada.com or Joe Cannon at jcannon@oada.com with any questions regarding Senate Bill 242, and how you can help our legislative advocacy efforts.