Download This Version in Microsoft Word format
Indicates Matter Stricken
Indicates New Matter
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
May 2, 2007
H. 3084
S. Printed 5/2/07--H.
Read the first time January 9, 2007.
To whom was referred a Bill (H. 3084) to amend Section 56-16-10, Code of Laws of South Carolina, 1976, relating to definitions of terms contained in certain provisions that regulate motorcycle manufacturers, distributors, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
/SECTION 1. Section 56-16-40 of the 1976 Code is amended to read:
"Section 56-16-40. If a manufacturer seeks to enter into a franchise establishing an additional new motorcycle dealership or relocating an existing new motorcycle dealership in a relevant market area where the line make line-make is represented, the manufacturer shall, in writing, first notify each new motorcycle dealer in this line make line-make in the relevant market area of the intention to establish an additional dealership or to relocate an existing dealership in the market area. The relevant market area is a radius of three ten miles around an existing dealership. Within fifteen forty-five days of receiving the notice or within fifteen forty-five days after the end of any appeal procedure provided by the manufacturer, the new motorcycle dealership may commence a civil action in a court of competent jurisdiction challenging the establishing or relocating of the new motorcycle dealership. Thereafter, the manufacturer shall not establish or relocate the proposed new motorcycle dealership unless the court has determined that there is good cause for permitting the establishment or relocation of the motorcycle dealership.
The court shall enjoin or prohibit the establishment of the new or relocated dealership within a ten mile radius of the existing dealership unless the manufacturer shows by a preponderance of the evidence that the existing dealership is not providing adequate representation of the line-make and that the new or relocated dealership is necessary to provide the public with reliable and convenient sales and service within that area. The burden of proof in establishing adequate representation is on the manufacturer. In determining whether good cause has been established for entering into or relocating an additional franchise for the same line-make, the court shall take into consideration the existing circumstances, including, but not limited to:
(1) the impact the establishment of the additional or relocated dealership will have on consumers, the public interest, and the existing dealership. However financial impact may be considered only with respect to the existing dealership;
(2) the size and permanency of investment reasonably made and the reasonable obligations incurred by the existing dealership to perform its obligation pursuant to the dealership's franchise agreement;
(3) the reasonably expected market penetration of the line-make after consideration of all factors which may affect the penetration including, but not limited to, demographic factors such as age, income, education, product popularity, retail lease transactions, and other factors affecting sales to consumers;
(4) actions by the manufacturer in denying its existing dealership of the same line-make the opportunity for reasonable growth, market expansion, or relocation, including the availability of the line-make in keeping with reasonable expectations of the manufacturer in providing an adequate number of dealerships;
(5) attempts by the manufacturer to coerce the existing dealership into consenting to an additional or relocated dealership of the same line-make within a ten mile radius of the existing dealership;
(6) distance, travel time, traffic patterns, and accessibility between the existing dealership of the same line-make and the location of the proposed new or relocated dealership;
(7) the likelihood of benefits to consumers from the establishment or relocation of the dealership, which benefits may not be obtained by other geographic or demographic changes, or other expected changes within a ten mile radius of the existing dealership;
(8) whether the existing dealership is in substantial compliance with its franchise agreement;
(9) whether there is adequate interbrand and intrabrand competition with respect to the line-make, including the adequacy of sales and service facilities;
(10) whether the establishment or relocation of the proposed dealership appears to be warranted and justified based on economic and market conditions pertinent to dealerships competing within a ten mile radius of the existing dealership, including anticipated changes; and
(11) the volume of service business transacted by the existing dealership.
The reopening in a relevant market area of a new motorcycle dealership within two miles of a location at which a former dealership of the same line make line-make had been in operation within the previous two years is not considered the establishment of a new motorcycle dealership.
The relocation of an existing dealer within its area of responsibility as defined in the franchise agreement is not subject to this section if the proposed relocation site is not within five miles of an existing dealer of the same line make line-make.
In determining whether good cause has been established for not entering into or relocating an additional franchise for the same line make, the court shall take into consideration the existing circumstances, including, but not limited to:
(a) the permanency of the investment;
(b) the effect on the retail new motorcycle business and the consuming public in the relevant market area;
(c) whether it is injurious to the public welfare for an additional new motor dealership to be established;
(d) whether the new motorcycle dealers of the same line make in that relevant market area are providing adequate competition and convenient consumer care for the motorcycles of the line make in the market area including the adequacy of motorcycle sales and service facilities, equipment, supply of motorcycle parts, and qualified service personnel;
(e) whether the new motorcycle dealers of the same line make in the relevant market area are providing adequate market penetration and representation. Good cause is not shown solely by a desire for further market penetration;
(f) whether the establishment of an additional new motorcycle dealership would increase competition and therefore be in the public interest; and
(g) the growth or decline in population and new motorcycle registrations in the relevant market area."
SECTION 2. Chapter 16, Title 56 of the 1976 Code is amended by adding:
"Section 56-16-220. In an action brought pursuant to this article, venue is in the State of South Carolina. A provision of a franchise or other agreement with contrary provisions is void and unenforceable."
SECTION 3. Chapter 16, Title 56 of the 1976 Code is amended by adding:
"Section 56-16-230. An action rising out of a provision of this chapter must be commenced within four years after the cause of action accrues. However, if a person liable under this chapter conceals the cause of action from the knowledge of the person entitled to bring it, the period prior to the discovery of his cause of action by the person entitled to bring it must be excluded in determining the time limited for the commencement of the action. If a cause of action accrues during the pendency of a civil, criminal, or administrative proceeding against a person brought by the United States, or any of its agencies, under the antitrust laws, the Federal Trade Commission Act, or another federal act, or the laws of the State related to antitrust laws or to franchising, the action may be commenced within one year after the final disposition of the civil, criminal or administrative proceeding."
SECTION 4. This act takes effect upon approval by the Governor. /
Renumber sections to conform.
Amend title to conform.
HARRY F. CATO for Committee.
TO AMEND SECTION 56-16-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS OF TERMS CONTAINED IN CERTAIN PROVISIONS THAT REGULATE MOTORCYCLE MANUFACTURERS, DISTRIBUTORS, DEALERS, AND WHOLESALERS, SO AS TO REVISE THE DEFINITIONS OF THE TERMS "MANUFACTURER", "DEALERSHIP FACILITIES", "FRANCHISE", AND "DEALER", AND TO PROVIDE DEFINITIONS FOR THE TERMS "MOTORCYCLE DEALERSHIP" AND "DEPARTMENT"; TO AMEND SECTION 56-16-40, RELATING TO THE PROCEDURE A MANUFACTURER WHO SEEKS TO ENTER INTO A FRANCHISE ESTABLISHING AN ADDITIONAL NEW MOTORCYCLE DEALERSHIP OR RELOCATING AN EXISTING NEW MOTORCYCLE DEALERSHIP IN A RELEVANT MARKET AREA WHERE THIS LINE MAKE IS REPRESENTED MUST FOLLOW, SO AS TO DELETE THE EXISTING PROCEDURE AND ESTABLISH A NEW PROCEDURE; TO ADD SECTION 56-16-45 SO AS TO PROVIDE THAT IT IS UNLAWFUL FOR CERTAIN ENTITIES TO OWN, OPERATE, OR CONTROL A MOTORCYCLE DEALERSHIP OR TO ESTABLISH AN ADDITIONAL DEALER OR MOTORCYCLE DEALERSHIP UNDER CERTAIN CIRCUMSTANCES, TO PROVIDE THAT IT IS UNLAWFUL FOR CERTAIN ENTITIES TO COMPETE UNFAIRLY WITH A MOTORCYCLE DEALER UNDER CERTAIN CIRCUMSTANCES, TO PROVIDE THAT IT IS UNLAWFUL FOR CERTAIN ENTITIES TO OWN A FACILITY THAT ENGAGES PRIMARILY IN THE REPAIR OF MOTORCYCLES; TO AMEND SECTION 56-16-50, RELATING TO THE COMPENSATION OF A MOTORCYCLE DEALER UPON TERMINATION, NONRENEWAL, OR CANCELLATION OF A FRANCHISE BY A MANUFACTURER OR DISTRIBUTOR, SO AS TO MAKE A TECHNICAL CHANGE, TO PROVIDE THAT THE PROVISIONS CONTAINED IN SECTION 56-16-45 ARE APPLICABLE TO THIS PROVISION, TO PROVIDE THAT THE MOTORCYCLE DEALER MUST BE COMPENSATED FOR THE REASONABLE GOOD WILL FOR THE FRANCHISE, AND TO REVISE THE CONDITIONS UPON WHICH A DEALER MAY BE COMPENSATED; TO ADD SECTION 56-16-85 SO AS TO PROVIDE THAT THE PROVISIONS THAT REGULATE MOTORCYCLE MANUFACTURERS, DISTRIBUTORS, DEALERS, AND WHOLESALERS APPLY TO ALL WRITTEN AND ORAL AGREEMENTS BETWEEN A MANUFACTURER, FACTORY BRANCH, DISTRIBUTOR BRANCH, DISTRIBUTOR, WHOLESALER, OR FRANCHISOR WITH A MOTORCYCLE DEALER; TO ADD SECTION 56-16-86 SO AS TO PROVIDE THAT A DEALERSHIP MAY CONTRACT WITH AN ON-LINE ELECTRONIC SERVICE TO PROVIDE MOTORCYCLES TO CONSUMERS IN THIS STATE; TO AMEND SECTION 56-16-100, RELATING TO CERTAIN PRACTICES ENGAGED IN BY A MANUFACTURER, FACTORY BRANCH, FACTORY REPRESENTATIVE, OR MOTORCYCLE DEALER WHICH ARE UNLAWFUL, SO AS TO PROVIDE THAT THIS PROVISION ALSO APPLIES TO WHOLESALERS AND WHOLESALER REPRESENTATIVES, TO MAKE TECHNICAL CHANGES, AND TO PROVIDE THE STANDARD OF PROOF THAT A MANUFACTURER MUST BEAR IN A PROCEEDING THAT ARISES PURSUANT TO THIS SECTION; TO AMEND SECTION 56-16-200, RELATING TO RELIEF AVAILABLE TO PERSONS INJURED PURSUANT TO THE PROVISIONS CONTAINED IN THIS CHAPTER, SO AS TO PROVIDE FOR ADDITIONAL INJUNCTIVE RELIEF, AND TO PROVIDE THAT PUNITIVE DAMAGES MAY BE AWARDED IF A DEFENDANT HAS ACTED IN BAD FAITH; TO ADD SECTION 56-16-205 SO AS TO PROVIDE FOR THE STATUTE OF LIMITATIONS FOR THE COMMENCEMENT OF AN ACTION THAT ARISES OUT OF A PROVISION RELATING TO THE REGULATION OF MOTORCYCLE MANUFACTURERS, DISTRIBUTORS, DEALERS, AND WHOLESALERS; TO AMEND SECTION 56-16-210, RELATING TO CONTRACTS THAT VIOLATE THE PROVISIONS THAT REGULATE MOTORCYCLE MANUFACTURERS, DISTRIBUTORS, DEALERS, AND WHOLESALERS, SO AS TO PROVIDE THAT THIS STATE'S LAW APPLIES TO ANY FRANCHISE FOR A DEALERSHIP LOCATED IN THIS STATE, AND THAT VENUE IS IN THIS STATE FOR AN ACTION BROUGHT PURSUANT TO THESE PROVISIONS; AND TO REPEAL SECTION 56-16-70, RELATING TO A DEALER'S VOLUNTARY CANCELLATION, NONRENEWAL, OR TERMINATION OF A FRANCHISE AGREEMENT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 56-16-10 of the 1976 Code is amended to read:
"Section 56-16-10. As used in this chapter:
(a) 'Motorcycle' means every motor vehicle having a seat or saddle for the use of the rider and designed to travel on not more than two wheels in contact with the ground. This section shall not apply to bicycles with helper motors or vehicles defined in Section 56-3-3510.
(b) 'Manufacturer' means any person, resident, or nonresident who manufacturers or assembles new motorcycles, or imports motorcycles for distribution through distributors of motor vehicles, including any person, partnership, or corporation which acts for and is under the control of a manufacturer or assembler in connection with the distribution of motorcycles and includes distributor and factory branch.
(c) 'Dealership facilities' means the real estate, buildings, fixtures, and improvements devoted to the conduct of business under the franchise by the new motorcycle dealer franchisee.
(d) 'Franchise' means the written agreement, or contract, grant of rights, or any other mutual understanding or informal agreement between any a new motorcycle manufacturer, and any new a motorcycle dealer which including an agreement for a temporary facility for the sale or service of the franchised product, that purports to fix the legal rights and liabilities of the parties to such agreement or contract, and pursuant to which the dealer purchases and resells the franchised product or leases or rents the dealership premises. As used in this chapter, 'franchised product' includes, but is not limited to, motorcycles and any other goods or services associated with the franchise.
(e) 'Factory branch' means a branch office maintained by a manufacturer which manufactures or assembles motorcycles for sale to distributors or motorcycle dealers or which is maintained for directing and supervising the representatives of the manufacturer.
(f) 'Distributor branch' means a branch office maintained by a distributor who sells or distributes new or used motorcycles to motorcycle dealers.
(g) 'Factory representative' means a representative employed by a manufacturer or by a factory branch for the purpose of making or promoting the sale of motorcycles or for supervising, servicing, instructing, or contracting with motorcycle dealers or prospective motorcycle dealers.
(h) 'Distributor representative' means a representative employed by a distributor branch or distributor.
(i) 'Franchiser' means a manufacturer, distributor, or wholesaler who grants a franchise to a motorcycle dealer.
(j) 'Franchisee' means a motorcycle dealer to whom a franchise is offered or granted.
(k) 'Sale' means the issuance, transfer, agreement for transfer, exchange, pledge, hypothecation, mortgage in any form, whether by transfer in trust or otherwise, of any motorcycle or interest therein or of any franchise related thereto and any option, subscription, or other contract, or solicitation, looking to a sale, or offer or attempt to sell in any form, whether spoken or written. A gift or delivery of any motorcycle or franchise with respect thereto, with or as a bonus on account of the sale of anything, is a sale of such motorcycle or franchise.
(l) 'Fraud' means, in addition to its normal legal connotation: a misrepresentation in any manner, whether intentionally false or due to gross negligence, of a material fact; a promise or representation not made honestly and in good faith; and an intentional failure to disclose a material fact.
(m) 'Person' means a natural person, corporation, partnership, trust, or other entity, and, in case of an entity, it includes any other entity in which it has a majority interest or effectively controls as well as the individual officers, directors, and other persons in active control of the activities of each such entity.
(n) 'New motorcycle' means a motorcycle which has not been previously sold to any person except a distributor or wholesaler or motorcycle dealer for resale.
(o) 'Distributor' means any person who sells or distributes new motorcycles to motorcycle dealers or who maintains distributor representatives within the State.
(p) 'Dealer' or 'motorcycle dealer' means any person who sells or attempts to affect the sale of any motorcycle the franchised product. These terms do not include:
(1) distributors or wholesalers.;
(2) receivers, trustees, administrators, executors, guardians, or other persons appointed by or acting under the judgment, or order of any court.;
(3) public officers while performing their official duties.;
(4) persons disposing of motorcycles acquired for their own use and so used in good faith and not for the purpose of avoiding the provisions of law. Any person who effects or attempts to effect the sale of more than five motorcycles in any one calendar year is considered a dealer or wholesaler, as appropriate, for purposes of this chapter.; or
(5) finance companies or other financial institutions who sell repossessed motorcycles and insurance companies who sell motorcycles they own as an incident to payment made under policies of insurance.
(q) 'Wholesaler' or 'motorcycle wholesaler' means any person who sells or attempts to affect the sale of any used motorcycle exclusively to motorcycle dealers or to other wholesalers.
(r) [Deleted] 'Motorcycle dealership' or 'dealership' means a facility, including a temporary facility, for the sale or service of franchised product. The term also includes other alternate retail and servicing facilities associated with the franchise.
(s) 'Department' means the South Carolina Department of Motor Vehicles."
SECTION 2. Section 56-16-40 of the 1976 Code is amended to read:
"Section 56-16-40. If a manufacturer seeks to enter into a franchise establishing an additional new motorcycle dealership or relocating an existing new motorcycle dealership in a relevant market area where the line make is represented, the manufacturer shall, in writing, first notify each new motorcycle dealer in this line make in the relevant market area of the intention to establish an additional dealership or to relocate an existing dealership in the market area. The relevant market area is a radius of three miles around an existing dealership. Within fifteen days of receiving the notice or within fifteen days after the end of any appeal procedure provided by the manufacturer, the new motorcycle dealership may commence a civil action in a court of competent jurisdiction challenging the establishing or relocating of the new motorcycle dealership. Thereafter, the manufacturer shall not establish or relocate the proposed new motorcycle dealership unless the court has determined that there is good cause for permitting the establishment or relocation of the motorcycle dealership.
The reopening in a relevant market area of a new motorcycle dealership within two miles of a location at which a former dealership of the same line make had been in operation within the previous two years is not considered the establishment of a new motorcycle dealership.
The relocation of an existing dealer within its area of responsibility as defined in the franchise agreement is not subject to this section if the proposed relocation site is not within five miles of an existing dealer of the same line make.
In determining whether good cause has been established for not entering into or relocating an additional franchise for the same line make, the court shall take into consideration the existing circumstances, including, but not limited to:
(a) the permanency of the investment;
(b) the effect on the retail new motorcycle business and the consuming public in the relevant market area;
(c) whether it is injurious to the public welfare for an additional new motor dealership to be established;
d) whether the new motorcycle dealers of the same line make in that relevant market area are providing adequate competition and convenient consumer care for the motorcycles of the line make in the market area including the adequacy of motorcycle sales and service facilities, equipment, supply of motorcycle parts, and qualified service personnel;
(e) whether the new motorcycle dealers of the same line make in the relevant market area are providing adequate market penetration and representation. Good cause is not shown solely by a desire for further market penetration;
(f) whether the establishment of an additional new motorcycle dealership would increase competition and therefore be in the public interest; and
(g) the growth or decline in population and new motorcycle registrations in the relevant market area. (A) A manufacturer shall not establish an additional motorcycle dealership or relocate an existing motorcycle dealership in a relevant market area where the line make is represented by another dealer without good cause and until sixty days after receipt of notification in writing by each motorcycle dealer by certified mail of the same line make in the relevant market area of the intention to establish an additional dealership or to relocate an existing dealership in the market area and stating the specific grounds for establishing or relocating the dealership. The relevant market area is a radius of twenty miles around each existing dealership location. An action may be brought by an affected motorcycle dealership challenging the establishing of the additional dealership or the relocating of an existing motorcycle dealership and must be commenced in a court of competent jurisdiction within sixty days of receipt of the required written notice from the manufacturer. After the filing of an action, the manufacturer shall not establish or relocate the proposed motorcycle dealership until the final conclusion of the action. An affected dealer is entitled to an injunction upon filing a petition to the court to enforce the provisions of this section and prevent the establishment or relocation of a dealership within the relevant market area of the affected dealer until the matter is resolved.
(B) The manufacturer shall bear the burden of proving good cause for the establishment of an additional dealership or the relocation of and existing dealership by a preponderance of the evidence. In determining whether good cause has been established for entering into or relocating an additional franchise for the same line make, the court shall take into consideration the existing circumstances, including, but not limited to:
(1) whether the affected dealer has failed, for the past two consecutive years, to meet the standard brands 'National Market Share' as defined by the Motorcycle Industry Council;
(2) the permanency, financial magnitude and related diminution in value of the investment of the affected existing dealer and dealership;
(3) the effect on the retail motorcycle business of the affected dealer in the relevant market area and whether there is any dilution in the affected dealer's brand market share;
(4) whether the affected dealer is in substantial compliance with its franchise agreement;
(5) whether the motorcycle dealers of the same line make in that relevant market area are providing convenient consumer care for the motorcycles of the line make in the market area including service facilities, equipment, supply of motorcycle parts, and qualified service personnel;
(6) whether the new motorcycle dealers of the same line make in the relevant market area are providing adequate market penetration and representation balanced with the reasonably expected market penetration of the line-make motorcycle. Good cause is not shown solely by a desire for further market penetration; and
(7) attempts by franchiser to coerce the affected dealership into consenting to an additional or relocated dealership of the same line-make within a twenty miles radius of the affected dealership.
(C) This section does not apply to the:
(1) addition of a new dealership at a location that is within a five-mile radius of a former dealership of the same line make and that has been closed for less than two years;
(2) relocation of an existing dealership to a new location that is further away from the protesting dealer's location than the relocated dealer's previous location; or
(3) relocation of an existing dealership to a new location that is within a five-mile radius of the dealership's current location, when it has been at the current location at least ten years."
SECTION 3. Chapter 16, Title 56 of the 1976 Code is amended by adding:
"Section 56-16-45. (A) It is unlawful for a manufacturer, factory branch, distributor branch, distributor, wholesaler or franchiser or a parent, affiliate, wholly or partially owned subsidiary, officer, or representative of a manufacturer, factory branch, distributor branch, distributor or wholesaler to own, operate, or control or to participate in the ownership, operation, or control of a motorcycle dealership in this State, to establish in this State an additional dealer or motorcycle dealership in which that person or entity has an interest, or to own, operate, or control, directly or indirectly, an interest in a dealer or motorcycle dealership in this State, excluding a passive interest in a publicly traded corporation held for investment purposes. This subsection does not prohibit the ownership, operation, or control of a motorcycle dealership by a manufacturer, factory branch, distributor branch, distributor, or wholesaler:
(1) for a temporary period, not to exceed one year, during the transition from one owner or operator to another, except that on a showing by a manufacturer, factory branch, distributor branch, distributor, or wholesaler of good cause, a court of competent jurisdiction may extend this time limit for periods up to an additional twelve months; or
(2) during a period in which the motorcycle dealership is being sold pursuant to a bona fide contract, shareholder agreement, or purchase option to the operator of the motorcycle dealership. (B)(1) It is unlawful for a manufacturer, factory branch, distributor branch, distributor or wholesaler or any parent, affiliate, wholly or partially owned subsidiary, officer, or representative of a manufacturer, factory branch, distributor branch, distributor or wholesaler to compete unfairly with a motorcycle dealer of the same line make operating pursuant to a franchise in this State. Except as otherwise provided in this subsection, the mere ownership, operation, or control of a motorcycle dealership by a manufacturer, factory branch, distributor branch, distributor, or wholesaler pursuant to the conditions set forth in subsection (A) of this section is not a violation of this subsection.
(2) For purposes of this subsection, a manufacturer, factory branch, distributor branch, distributor or wholesaler or any parent, affiliate, wholly or partially owned subsidiary, officer, or representative of a manufacturer, factory branch, distributor branch, distributor or wholesaler is conclusively presumed to be competing unfairly if it gives preferential treatment to a dealer or dealership in which an interest is directly or indirectly owned, operated, or controlled by the manufacturer, factory branch, distributor branch, distributor or wholesaler or any partner, affiliate, wholly or partially owned subsidiary, officer, or representative of the manufacturer, factory branch, distributor branch, distributor or wholesaler regarding any and all goods associated with the franchise, expressly including, but not limited to, preferential treatment regarding the direct or indirect cost of motorcycles or parts, the availability or allocation of motorcycles or parts, the availability or allocation of special or program motorcycles, the provision of service and service support, the availability of or participation in special programs, the administration of warranty policy, the availability or allocation of factory rebates, or the availability and use of after warranty adjustments, advertising, floor planning, or financing or financing programs.
(C) It is unlawful for a manufacturer, factory branch, distributor branch, distributor or wholesaler or any parent, affiliate, wholly or partially owned subsidiary, officer, or representative of a manufacturer, factory branch, distributor branch, distributor or wholesaler to own a facility that engages primarily in the repair of motorcycles, if the repairs are performed pursuant to the terms of a franchise or other agreement or the repairs are performed as part of a manufacturer's, factory branch's, distributor branch's, distributor's, or wholesaler's warranty. Nothing in this subsection prohibits a manufacturer, factory branch, distributor branch, distributor or wholesaler or any parent, affiliate, wholly or partially owned subsidiary, officer, or representative of a manufacturer, factory branch, distributor branch, distributor, wholesaler or franchiser from owning a facility to perform warranty or other repairs on motorcycles owned and operated by the manufacturer, factory branch, distributor branch, distributor or wholesaler or any parent, affiliate, wholly or partially owned subsidiary, officer, or representative of a manufacturer, factory branch, distributor branch, distributor or wholesaler.
(D) Except as may be provided in subsections (A) and (B) of this section, a manufacturer, factory branch, distributor branch, distributor or wholesaler may not sell, directly or indirectly, a motorcycle to a consumer in this State, except through a motorcycle dealer holding a franchise for the line make that includes the motorcycle. This subsection does not apply to manufacturer, factory branch, distributor branch, distributor, wholesaler or franchiser sales of motorcycles to the federal government, nor to manufacturer, factory branch, distributor branch, distributor or wholesaler leases of motorcycles to employees of the manufacturer, factory branch, distributor branch, distributor or wholesaler. Nothing in this subsection prohibits a manufacturer, factory branch, distributor branch, distributor or wholesaler or any parent, affiliate, wholly or partially owned subsidiary, officer, or representative of a manufacturer, factory branch, distributor branch, distributor or wholesaler operating as a motorcycle lessor from selling a motorcycle to the lessee at the conclusion of a lease agreement between the two parties. Nothing in this subsection prevents a manufacturer, factory branch, distributor branch, distributor or wholesaler from maintaining or establishing an e-commerce web site for the purpose of referring prospective customers to motorcycle dealers holding a franchise for the same line make of the manufacturer, factory branch, distributor branch, distributor or wholesaler."
SECTION 4. Section 56-16-50 of the 1976 Code is amended to read:
"Section 56-16-50. (a) Upon the termination, nonrenewal, or cancellation of any franchise by the manufacturer or distributor, pursuant to this section, the new and subject to the provision contained in Section 56-16-45, the motorcycle dealer must be allowed fair and reasonable compensation by the manufacturer for the:
(1) new motorcycle inventory which has been acquired from the manufacturer within eighteen months, at a price not to exceed the original manufacturer's price to the dealer, which has not been altered or damaged, and which has not been driven more than two hundred miles, and for which no certificate of title has been issued;
(2) unused, undamaged, and unsold supplies and parts purchased from the manufacturer, at a price not to exceed the original manufacturer's price to the dealer, if the supplies and parts are currently offered for sale by the manufacturer or distributor in its current parts catalogs and are in salable condition;
(3) equipment and furnishings which have not been altered or damaged and which have been required by the manufacturer or distributor to be purchased by the new motorcycle dealer from the manufacturer or distributor, or their approved sources;
(4) special tools which have not been altered or damaged and which have been required by the manufacturer or distributor to be purchased by the new motorcycle dealer from the manufacturer or distributor, or their approved sources, within five years immediately preceding the termination, nonrenewal, or cancellation of the franchise. ; and
(5) reasonable good will for the franchise to be determined by an analysis of similar third party sales of other franchises of the same line make.
(b) Fair and reasonable compensation for the above items must be paid by the manufacturer within ninety days of the effective date of termination, cancellation, or nonrenewal, if the new motorcycle dealer has clear title to the inventory items contained in subsection (a) and has conveyed title and possession to the manufacturer."
SECTION 5. Chapter 16, Title 56 of the 1976 Code is amended by adding:
"Section 56-16-85. The provisions of this chapter apply to all written or oral agreements between a manufacturer, factory branch, distributor branch, distributor, wholesaler or franchisor with a motorcycle dealer including, but not limited to, the franchise offering, the franchise agreement, sales of goods, services or advertising, leases or mortgages of real or personal property, promises to pay, security interests, pledges, insurance contracts, advertising contracts, construction or installation contracts, servicing contracts, and all other agreements in which the manufacturer, factory branch, distributor branch, distributor, wholesaler or franchisor has a direct or indirect interest."
SECTION 6. Chapter 16, Title 56 of the 1976 Code is amended by adding:
"Section 56-16-86. This chapter does not prohibit a dealership located in this State from contracting with an on-line electronic service to provide motorcycles to consumers in this State."
SECTION 7. Section 56-16-100 of the 1976 Code is amended to read:
"Section 56-16-100. (1) It is a violation of paragraph (a) of Section 56-16-90 for any manufacturer, factory branch, factory representative, distributor, or wholesaler, distributor branch, distributor representative, wholesaler, wholesaler representative, or motorcycle dealer to engage in any action which is arbitrary, in bad faith, or unconscionable and which causes damage to any of the parties or to the public.
(2) It is a violation of paragraph (a) of Section 56-16-90 for a manufacturer, a factory branch, factory representative, distributor, a wholesaler, a distributor branch or division, a factory branch or division, or a wholesale branch or division, distributor representative, wholesaler, wholesaler representative, or officer, agent, or other representative thereof, to coerce, or attempt to coerce, any motorcycle dealer:
(a) To to order or accept delivery of any motorcycle, appliances, equipment, parts, or accessories therefor, or any other commodity or commodities which such motorcycle dealer has not voluntarily ordered.;
(b) To to order or accept delivery of any a motorcycle with special features, appliances, accessories, or equipment not included in the list price of the motorcycle as publicly advertised by the manufacturer thereof.; or
(c) To to order for any a person any parts, accessories, equipment, machinery, tools, appliances, or any commodity whatsoever.
(3) It is a violation of paragraph (a) of Section 56-16-90 for a manufacturer, factory branch, factory representative a distributor, a wholesaler, a distributor branch or division, a factory branch or division, or a wholesale branch or division, distributor representative, wholesaler, wholesaler representative, or officer, agent, or other representative thereof:
(a) To to refuse to deliver, in reasonable quantities and within a reasonable time after receipt of dealer's order, to any motorcycle dealer having a franchise or contractual arrangement for the retail sale of new motor vehicles motorcycles sold or distributed by such the manufacturer, franchiser, distributor branch or division, factory branch or division, or wholesale branch or division, any such motorcycles as are covered by such franchise or contract specifically publicly advertised by such manufacturer, distributor, or wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division to be available for immediate delivery. The failure to deliver any motorcycle is not a violation of this chapter if the failure is due to an act of God, work stoppage, or delay due to a strike or labor difficulty, shortage of materials, freight embargo, or other cause over which the manufacturer, distributor, or wholesaler or franchiser, or any agent thereof, has no control.;
(b) To to coerce, or attempt to coerce, any motorcycle dealer to enter into any agreement with such manufacturer, distributor, wholesaler, or franchiser distributor branch or division, factory branch or division, or wholesale branch or division, or officer, agent, or other representative thereof, or to do any other act prejudicial to such dealer by threatening to cancel any franchise or any contractual agreement existing between such manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, and such the dealer. Notice in good faith to any motorcycle dealer of such the dealer's violation of any terms or provisions of such the franchise or contractual agreement is not a violation of this chapter.;
(c) To to terminate or cancel, or substantially change the franchise or selling agreement of any dealer without due cause. The nonrenewal of a franchise or selling agreement, without due cause, is an unfair termination or cancellation, regardless of the terms or provisions of the franchise or selling agreement. The manufacturer, distributor, wholesaler or franchiser, distributor branch or division, factory branch or division, or wholesale branch or division, or officer, agent, or other representatives thereof shall notify a motorcycle dealer in writing of the termination, or cancellation or substantial change of the franchise or selling agreement of the dealer at least sixty days before the effective date thereof, stating the specific grounds for such the termination, or cancellation or substantial change; and such the manufacturer, distributor, wholesaler, or franchiser, distributor branch or division, factory branch or division, or wholesale branch or division, or officer, agent, or other representative thereof shall notify a motorcycle dealer in writing at least sixty days before the contractual term of his franchise or selling agreement expires that it will not be renewed, stating the specific grounds for such nonrenewal in those cases where there is no intention to renew, and in no event shall the contractual term of any such franchise or selling agreement expire, without the written consent of the motorcycle dealer involved, prior to the expiration of at least sixty days following such written notice. During the sixty-day period, either party may in appropriate circumstances petition a court to modify the sixty-day stay or to extend it pending. Any termination, cancellation, or substantial change is not effective until a final determination of the proceedings on the merits. The manufacturer bears the burden of proving due cause pursuant to this section by a preponderance of the evidence. The court has authority to grant preliminary and final injunctive relief.;
(d) To to resort to or use any false or misleading advertisement in connection with his business as such manufacturer, distributor, or wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, or officer, agent, or other representative thereof. ;
(e) To to offer to sell or to sell any new motorcycle to any motorcycle dealer at a lower actual price therefor than the actual price offered to any other motorcycle dealer for the same model cycle similarly equipped or to utilize any device including, but not limited to, sales promotion plans or programs which result in such lesser actual price. The provisions of this item do not apply to sales to a motorcycle dealer for resale to any unit of the United States Government, the State, or any of its political subdivisions. The provisions of this paragraph do not apply to sales to a motorcycle dealer of any motorcycle ultimately sold, donated, or used by the dealer in a driver education program. The provisions of this paragraph do not apply so long as a manufacturer, distributor, or wholesaler, distributor branch or division, factory branch or division, or wholesale branch or division, or any agent thereof, offers to sell or sells new motorcycles to all motorcycle dealers at an equal price. This provision does not apply to sales by manufacturer, distributor, or wholesaler to the United States Government or any agency thereof.;
(f) To to offer to sell or to sell parts or accessories to any new motorcycle dealer for use in his own business for the purpose of repairing or replacing it on a comparable part or accessory, at a lower actual price therefor than the actual price charged to any other new motorcycle dealer for similar parts or accessories for use in his own business. In those cases where motorcycle dealers operate and serve as wholesalers of parts and accessories to retail outlets or other dealers, whether or not the dealer is regularly designated as a wholesaler, nothing herein contained may be construed to prevent a manufacturer, distributor, or wholesaler, or any agent thereof, from selling to a motorcycle dealer who operates and services as a wholesaler of parts and accessories, such parts and accessories as may be ordered by such motorcycle dealer for resale to retail outlets, at a lower actual price than the actual price charged a motorcycle dealer who does not operate or serve as a wholesaler of parts and accessories.;
(g) To to prevent or attempt to prevent by contract or otherwise, any motorcycle dealer from changing the capital structure of his dealership or the means by or through which he finances the operation of his dealership, provided the dealer at all times meets any reasonable capital standards agreed to between the dealership and the manufacturer, distributor, or wholesaler or franchiser, and provided the change by the dealer does not result in a change in the executive management of the dealership.;
(h) To to prevent or attempt to prevent by contract or otherwise, any motorcycle dealer or any officer, partner, or stockholder of any motorcycle dealer from selling or transferring any part of the interest of any of them to any other person or party. No dealer, officer, partner, or stockholder has the right to sell, transfer, or assign the franchise or power of management or control thereunder without the consent of the manufacturer, distributor, or wholesaler except that the consent is being unreasonably withheld.;
(i) To to obtain money, goods, services, anything of value, or any other benefit from any other person with whom the motorcycle dealer does business, on account of or in relation to the transactions between the dealer and such other person, unless the benefit is promptly accounted for and transmitted to the motorcycle dealer.; or
(j) To to require a motorcycle dealer to assent to a release, assignment, novation, waiver, or estoppel which would relieve any person from liability imposed by this chapter.
(4) It is a violation of paragraph (a) of Section 56-16-90 for a motorcycle dealer:
(a) To to require a purchaser of a new motorcycle, as a condition of sale and delivery thereof, to also purchase special features, appliances, equipment, parts, or accessories not desired or requested by the purchaser. This prohibition does not apply as to special features, appliances, equipment, parts, or accessories which are already installed on the motorcycle when received by the dealer provided the motorcycle dealer prior to the consummation of the purchase reveals to the purchaser the substance of this paragraph.;
(b) To to represent and sell as a new motorcycle any motorcycle which has been used and operated for demonstration purposes or which is otherwise a used motorcycle.; or
(c) To to resort to or use any false or misleading advertisement in connection with his business as such a motorcycle dealer.
(5) There is created the Office of Administrator, within the Attorney General's office, and he shall appoint such personnel within his office for the purpose of regulating this chapter. The administrator has the power to investigate, issue cease and desist orders and injunctive relief on any valid abuse connected with the sale, rental, or leasing of a new or used motorcycle. This power only applies after reasonable attempts by the consumer have been made with the seller, dealer, manufacturer, or lessor of the motorcycle to alleviate the complaint."
SECTION 8. Section 56-16-200 of the 1976 Code is amended to read:
"Section 56-16-200. (1) In addition to temporary or permanent injunctive relief as provided in Section 56-16-40 or Section 56-16-100(3)(c), any person who is injured in his business or property by reason of anything forbidden in this chapter may sue therefor in the court of common pleas and recover double the actual damages by him sustained, and the cost of suit, including a reasonable attorney's fee.
(2) When the action is one of common or general interest to many persons or when the parties are numerous and it is impracticable to bring them all before the court, one or more may sue for the benefit of the whole, including actions for injunctive relief.
(3) In an action for money damages, if the jury finds that the defendant acted maliciously or in bad faith, the jury may award punitive damages not to exceed three times the actual damages.
(4) A final judgment, order, or decree rendered against a person in any civil, criminal, or administrative proceeding under the United States antitrust laws, under the Federal Trade Commission Act, or under this chapter constitutes prima facie evidence against the person subject to the conditions of the United States Antitrust Law (15 U.S.C. Section 16)."
SECTION 9. Chapter 16, Title 56 of the 1976 Code is amended by adding:
"Section 56-16-205. Actions rising out of any provision of this chapter must be commenced within four years next after the cause of action accrues. However, if a person liable pursuant to this chapter conceals the cause of action from the knowledge of the person entitled to bring it, the period prior to the discovery of his cause of action by the person entitled to it must be excluded in determining the time limited for the commencement of the action. If a cause of action accrues during the pendency of a civil, criminal, or administrative proceeding against a person brought by the United States, or any of its agencies, under the antitrust laws, the Federal Trade Commission Act, or any other federal act, or the laws of this State related to antitrust laws or to franchising, such actions may be commenced within one year after the final disposition of such civil, criminal, or administrative proceeding."
SECTION 10. Section 56-16-210 of the 1976 Code is amended to read:
"Section 56-16-210. (A) Any contract or part thereof or practice thereunder in violation of any provision of this chapter is against public policy and is void and unenforceable.
(B) South Carolina law shall apply to any franchise for a dealership located in this State. Any provision of a contract providing for the application of the law of any other state is void and of no effect.
(C) In an action brought pursuant to this chapter, venue is in this State. A provision of a franchise or other agreement with contrary provisions is void and unenforceable."
SECTION 11. Section 56-16-70 of the 1976 Code is repealed.
SECTION 12. The repeal or amendment by this act of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide. After the effective date of this act, all laws repealed or amended by this act must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.
SECTION 13. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 14. This act takes effect upon approval by the Governor.
This web page was last updated on Monday, June 22, 2009 at 2:34 P.M.