COLORADO and NEW HAMPSHIRE — Governors in two states are now considering legislation that would strengthen dealers’ rights in their agreements with manufacturers.
Colorado’s legislators are working to pass a “clarifying” bill that would ensure recent statutes passed by lawmakers pertain to existing dealer-manufacturer agreements. In New Hampshire, dealers are awaiting the governor’s signature on an amended “Dealer Bill of Rights.” Both pieces of legislation have been signed off on by both houses in their states.
Since 2009, Colorado’s legislators approved laws that limit manufacturer-mandated facility renovations to no more than every seven years, as well as give dealers the first right of refusal when a manufacturer closes a store after it files bankruptcy but later opens a new franchise locally. The latest proposed bill clarifies that these recent laws should apply to all existing dealer contracts with manufacturers.
“[The manufacturers] started saying last year that the new laws that we had passed do not apply to their franchise agreements,” explained Colorado Sen. David Balmer (R-Centennial), one of the sponsors of S.B. 265. “When we pass a law, it applies to all franchise agreements equally. It’s true you can’t go back and change something that’s already in place, but each time they are changing their franchise agreements [a material change like adding or updating new requirements upon dealers], we in Colorado law believe that’s a new franchise agreement.”
Balmer says he expects the bill to pass since Gov. John Hickenlooper has not given any pushback on the bill so far.
Colorado Automobile Dealers Association President Tim Jackson added that the bill received strong favor from both houses, but he said 10 to 12 manufacturer lobbyists tried to fight the bill. “They didn’t get a lot of traction on it,” he says. “It’s the future protections that they were concerned about. On that issue, we don’t have any additional protections planned for the future.”
According to Jackson, the association learned of about four to six instances in which manufacturers were ignoring the laws passed since 2009 when making demands on dealers. “Even though the number of times might not be too many, the amount of value and risk of the costs, it can be significant,” he says. “For that dealer, it’s a monumental issue because it means whether or not they keep their franchise.”
New Hampshire dealers also seek approval from Gov. Maggie Hassan on S.B. 126, a bill that would, among other provisions, limit facility upgrades to every 15 years. According to the New Hampshire Automobile Dealers Association, “after 15 years, the manufacturer has the burden of proof that the new building is necessary. At any time, a dealer may choose to — or, if the manufacturer is willing to offer substantial reimbursement (65 percent) — remodel or reconstruct their facility.”
The NHADA also states on its website: “Automobile manufacturers control nearly every aspect of a dealer’s livelihood. At the start of the relationship and at renewals, a dealer must sign a one-sided contract drafted by the manufacturer without any negotiation. During the relationship, the factory exercises further control through allocation of vehicles, pricing of vehicles, and various other methods. Like all other states, New Hampshire has a Dealer Bill of Rights that provides some balance to this one-sided relationship.”
— Stephanie Forshee