FI showroom red and grey logo
MenuMENU
SearchSEARCH

Calif. Dealers Seek New Protections Under State's Franchise Laws

New legislation aimed at strengthening dealer protections under California’s franchise laws will have its first committee hearing on Monday. One of its provisions specifically addresses the disclosure policy General Motors issued last summer regarding the sale of non-GM service contracts.

April 19, 2018
Calif. Dealers Seek New Protections Under State's Franchise Laws

 

4 min to read


SACRAMENTO, Calif. — When General Motors ordered its dealers last summer to use a new disclosure form when non-GM service contracts, parts, and accessories are sold to customers — and said that failure to do so would be a material breach of the automaker’s Dealer Sales and Service Agreement — Brian Maas of the California New Car Dealers Association (CNCDA) hinted to F&I and Showroom that it might be time to revisit the state’s franchise laws.

“This seems to be following a pattern from GM. I don’t know what’s going on in the Renaissance Center in Detroit,” he said last August, just after GM issued its new disclosure policy. “Why they’re announcing all these policies that seem to make the relationship with their dealers more difficult boggles my mind.”

Ad Loading...

This week, the CNCDA announced that new legislation aimed at strengthening dealer protections under the state’s franchise laws is set to go before the Assembly Transportation Committee on Monday, April 23, for its first committee hearing. A spokesperson for the association said GM’s actions last summer are just one of a number of examples of why passage of AB 2107 is needed.

“Restoring balance to the relationship between manufacturers and dealers is the chief purpose of AB 2107,” said dealer Taz Harvey, who serves as chairperson of the CNCDA. “The bill will also better enable new-car dealers to provide the vehicles consumers demand while improving the resolution of warranty, recall and repair issues.”

The legislation, championed by Assemblywoman Eloise Reyes (D-San Bernardino, Calif.), also seeks to adapt recent actions taken in other states. For instance, AB 2107 would extend the prohibition against automakers competing against their own dealers statewide. The bill specifically lists subscription services as an example, noting that such programs would be prohibited unless the automaker uses franchisees to operate them.

The bill also addresses brand spin-offs and affiliates, such as when a manufacturer spins off a new line of an existing product and claims that the new model can be sold directly to consumers by the manufacture’s affiliate. In such cases, the bill specifies that a dealer who sold a vehicle to a customer can continue to provide service, parts, and accessories for the vehicle as long as the dealer maintains the same franchise. It also restricts the manufacturer’s ability to force dealers to repair a vehicle they are not allowed to sell or lease.

Additionally, the bill adds further clarifications related to retail reimbursements on warranty work and customer retail pay; expands the types of protests dealers can file with the state’s New Motor Vehicle Board regarding manufacturer encroachment; would deem a facility upgrade requirement as unreasonable if the dealer modified his or her facility in the last 15 years; and builds upon existing law requiring that all performance standards be reasonable with a dealer’s demographics, market characteristics, allocation, local and state economic circumstances, and historical performance of the line-make. In all, the bill contains provisions addressing 10 specific areas of the franchised dealer-to-manufacturer relationship.

Ad Loading...

As for the sales of non-factory service contracts, the CNCDA’s Maas said last August that the state prohibits manufacturers from discriminating against a franchised dealer for selling F&I products not endorsed by the manufacturer. However, the statute does not prohibit a franchiser from requiring its dealers to disclose to customers whether or not a service contract is backed by the manufacturer. Under AB 2107, however, the existing statutory disclosure dealers are required to give to customers when a non-OEM endorsed F&I product is sold would be preserved, thereby prohibiting OEMs from instituting their own disclosure form as GM did last summer.

The bill also clarifies that treating dealers differently when providing financing or advancing money because the dealer sold a non-approved product is prohibited.

“California’s new motor vehicle franchise system was established to protect dealers and their customers from onerous and continuous manufacturer requirements,” Harvey stated in the association’s press release. “The CNCDA and our members statewide are eager to work together with the author and stakeholders on this bill and we are committed to achieving a stronger, more equitable new motor vehicle franchise system.”

More F&I

Photo of a three-seat vehicle back seat
F&Iby Hannah MitchellMay 22, 2026

F&I Reaches for the Sky

The increasingly important profit center continued making gains in the first quarter, according to StoneEagle data, ancillary products proving more popular as consumers hold onto their buys longer.

Read More →
Cover image for a BOK Financial report titled “Timing the market: How avoiding volatility entirely can hurt long-term reinsurance program performance.” The image shows several road construction barricades with flashing amber warning lights lined up in a nighttime work zone. Beneath the image, red text explains that avoiding volatility can mean falling behind inflation and missing market rebounds that drive long-term surplus growth. The BOK Financial logo appears at the bottom right.
SponsoredMay 8, 2026

Timing the Market Can Hurt Long-Term Program Performance

For dealer-owned reinsurance entities, avoiding volatility entirely can mean falling behind inflation and missing market rebounds that drive long term surplus growth. Missing just a handful of strong market days can materially impact cumulative returns—an important reminder for long horizon trust and investment strategies.

Read More →
Ryan Ruff, The 90/10 Rule, Automotive Training Academy, Sales Series
F&IMay 6, 2026

The 90/10 Rule

In this video, Ryan Ruff explains the rule that elite sales professionals use to turn ordinary conversations into unforgettable customer experiences.

Read More →
Ad Loading...
Photo of essential oil diffuser on desk next to laptop
F&IMay 4, 2026

Your Office Is Talking

What’s the atmosphere saying about you to your customers? You can make minor adjustments and additions that transform your space into one that creates trust with the people on the other side of the desk.

Read More →
"Effective training ensures the customer’s needs remain at the heart of everything we do. When that is the focus, both sales and profits naturally improve." by Rick McCormick with F&I and Showroom logo and picture of Rick McCormick
F&IMay 1, 2026

F&I Training Fundamentals

How can auto dealerships help F&I managers fulfill their vital role in the most effective ways? Industry expert Rick McCormick shares his insights on the best ways to train these professionals and help them maintain good habits.

Read More →
Photo of car tire and the tread mark it left in snow
F&Iby Hannah MitchellApril 29, 2026

Not Just Any Tire Will Do

More consumers and businesses are opting for all-season options for various reasons as safety, sustainability and convenience push practical change.

Read More →
Ad Loading...
Photo of robot holding a laptop
F&Iby Hannah MitchellApril 27, 2026

How AI Will Drive the Next Wave of Innovation in Finance & Insurance

It’s time to take the next digital step to free F&I managers to handle the most challenging aspects of customer meetings.

Read More →
Photo of notepad and pen next to computer keyboard on desktop
F&IApril 13, 2026

Control in Sales Is an Illusion

Some of it should be given to the customer, but that doesn’t mean the F&I office relinquishes the process. In fact, a different approach both builds trust and boosts sales.

Read More →
Photo of external keyboard on office deak next to window
F&IApril 7, 2026

The Limited Warranty Game

Bringing it in-house benefits the dealership and its customers.

Read More →
Ad Loading...
Woman in casual clothing sitting at a desk
F&Iby Rick McCormickMarch 31, 2026

Curb The Confusion

Talk to F&I customers like you’d talk to a friend, without industry lingo or sales-like questions, and use hard proof to show, not tell, them about a need.

Read More →