BILL SUMMARY for SB09-091
HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR
|Votes: View--> ||Action Taken: |
|Moved to refer Senate Bill 09-091 to the Committee||PASS|
02:37 PM -- Senate Bill 09-091
Representative Rice, prime sponsor, presented Senate Bill 09-091 concerning motor vehicle dealer franchise agreements. This bill makes several changes to the relationship between motor vehicle manufacturers, distributors, or manufacturer representatives and motor vehicle dealers. Manufacturers, distributors, or manufacturer representatives are required to provide the dealer with the following:
- compensation for facility use upon franchise contract termination;
- compensation for the fair market value of the dealer's goodwill;
- compensation for dealer costs incurred in trying to sell a franchise if the manufacturer, distributor, or manufacturer representative disapproved of the sale; and
- 30 days notice for the denial of either the location selected for relocation, the sale of the dealership, or a change in management.
The bill outlines the abilities of either party to audit the other regarding warrantee, sales, or incentive claims. Finally, the bill prohibits certain actions by manufacturers, distributors, or manufacturer representatives that would place dealers in a situation where:
- unreasonable sales and service standards must be met in order to sell all models within a line of vehicles;
- the dealer must devote facilities, personnel, or space exclusively to one brand;
- the dealer is not offered the same incentives as other dealers; and
- a franchise agreement is contingent on facilities improvements.
Violation of the bill is a class 1 misdemeanor.
02:45 PM -- Gordy Nevers, representing Chrysler Motors and the Alliance of Automobile Manufacturers, testified against the bill. He said Chrysler and the Alliance is against the bill because the timing and the economy. Mr. Nevers explained that the bill imperils manufacturers to survive in this economy. He said they oppose the for the following reasons:
- the bill departs from the consumer protection purposes of the Colorado Franchise Act by allowing a dealer to place competing brands in his or her showroom without input from the manufacturer;
- the limits the ability of sophisticated business partners to contract with one another and allows the state to dictate the terms of what can and cannot be negotiated in a contract; and
- the bill disregards basic business fairness by removing all negotiating power from the manufacturers.
Representative Soper asked why it matters whether competing brands are in a show room together. Representative Gagliardi asked why he felt this bill disregards business fairness. Representative Ryden asked about a dealer selling competing brands.
02:57 PM -- Travis Golding, representing the Motorcycle Industry Council, testified on the bill and said the bill will raise costs for everyone.
03:07 PM -- Tim Jackson, representing the Colorado Automobile Dealers Association (CADA) and the Colorado Auto Retailers, testified in support of the bill and distributed a handout (Attachment C). He described the importance of the car dealer industry to Colorado and discussed the issue of dueling, or allowing dealers to sell competing lines of vehicles. Mr. Jackson responded to questions from the committee.
03:15 PM -- John Medved, representing Medved Autoplex and CADA, testified in support of the bill. Mr. Medved discussed the current relationship between dealers and manufacturers and described the effect of the economy on his business. He talked about his experience with being required to provide special facilities for Hummer and said he spent $7 million to build a special facility only to find out that Hummer canceled the contract. Mr. Medved explained that he did not need to build those facilities in the first place and now he has no remedy against the manufacturer. He talked about the service facilities which have become half full because they are not being used as much. He talked about other requests he has had from manufacturers.
Representative Ryden asked about other states. Mr. Jackson said there are several states that allow dueling.
03:30 PM -- Don Hicks, representing Shortline Auto, testified in support of the bill. He talked about a dealer who was supposed to testify but was afraid of the consequences from the manufacturers. He talked about another dealer who is not allowed to transfer stock to his family because the manufacturer is not pleased with his facility.
Lisa Schomp, representing Ralph Schomp Automotive and Fay Myers Motorcycle World, spoke in support of the bill. She stated that she thinks motorcycle dealers should be included in the bill. Ms. Schomp concurred with Mr. Medved's testimony. Ms. Schomp detailed her experience of opening a new BMW dealership in November of 2007. She stated that she is highly concerned about the demands that manufactures place on her. Ms. Schomp stated she is a good business person and would like the option to bring in other types of cars into her BMW lots and said she feels that it should be her choice. She also stated that she does not believe the bill will put out any manufacturing company.
03:46 PM -- Lee Payne, a Honda dealer in the Golden area, spoke in support of the bill. He stated that the bill is about re-establishing a balance of power between the dealers and the manufacturers.
03:49 PM -- Jerry Abboud, representing Powersport Dealers, spoke in support of the bill and talked about dueling.
03:52 PM -- Steve Larson, representing Wild West Motorsports, testified in support of the bill. He talked about Harley Davidson who asks dealers to make a destination dealerships. Mr. Larson said they are a small business with only 30 employees in Greely and talked about his business where he sells more than one brand. Mr. Larson responded to Mr. Nevers' testimony. He stated that they only have about six months to make all of their money for the year and talked about the impact allowing manufacturers to make them build new buildings would have on his business.
03:57 PM -- Bill Vickery, representing the Colorado Powersports Dealers Association, testified in support of the bill. He explained dueling and said he feels it is better when there is more than one brand available to the consumer. He discussed the balance of power between manufacturers and dealers.
03:59 PM -- Donavon Facey, representing the Colorado Powersports Dealers Association, testified in support of the bill. He spoke about his business and past legislation. He discussed the balance of power between manufacturers and dealers.
04:03 PM -- Randy Pennington, representing Transwest Trucks, testified in support of the bill. He said he had a similar situation as Mr. Medved with having to build a facility to accommodate a manufacturer that later went away. Mr. Pennington said he does not agree with the grandfathering in of used trucks.
04:08 PM -- Carl Larson, testified in support except for the one piece as Mr. Pennington discussed concerning used trucks and distributed a handout (Attachment D).
04:10 PM -- Micki Hackenberger and Art Hinkel, representing Navistar and International Truck and Engine Corporation, testified in support of the bill. Ms. Hackenberger addressed the concern over grandfathering clause.
Representative Rice said the bill allows dealers in Colorado to conduct their business and repeated Mr. Jackson's prior statement that the bill is a shield for the dealer not a sword against the manufacturer.
|TIME: || 04:19:14 PM|
|MOTION:||Moved to refer Senate Bill 09-091 to the Committee of the Whole. The motion passed 11-0.|
Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS
The committee adjourned.