Louisiana Revised Statutes 32:1267 – Succession; right of first refusal
Terms Used In Louisiana Revised Statutes 32:1267
- All-terrain vehicle: shall mean any vehicle manufactured for off-road use and issued a manufacturer's statement or certificate of origin, as required by the commission, that cannot be issued a registration certificate and license to operate on the public roads of this state because, at the time of manufacture, the vehicle does not meet the safety requirements prescribed by La. See Louisiana Revised Statutes 32:1252
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Dealer: means any person licensed to sell a motor vehicle, specialty vehicle, or recreational product subject to regulation by this Chapter. See Louisiana Revised Statutes 32:1252
- Designated successor: means the spouse, child, grandchild, parent, brother, or sister, of a dealer who, in the case of a deceased dealer, is entitled to inherit the dealer's ownership interest in the dealership under the terms of the dealer's will; the spouse, or other person who has otherwise been designated in writing by a deceased dealer to succeed him in the motor vehicle dealership, such designation having been furnished to the manufacturer; or the spouse, or other person who, under the laws of intestate succession of this state is entitled to inherit the interest; or who, in the case of an incapacitated dealer, has been appointed by a court in a proceeding interdicting the dealer as the legal representative of the dealer's property. See Louisiana Revised Statutes 32:1252
- Franchise: means any written contract or selling agreement between a motor vehicle or recreational products dealer, a motor vehicle lessor, or a specialty vehicle dealer and a manufacturer, motor vehicle lessor franchisor, or converter of a new motor vehicle or specialty vehicle or its distributor or factory branch by which the motor vehicle or recreational products dealer, motor vehicle lessor, or specialty vehicle dealer is authorized to engage in the business of selling or leasing the specific makes, models, or classifications of new motor vehicles, recreational products, or specialty vehicles marketed or leased by the manufacturer, motor vehicle lessor franchisor, or converter and designated in the franchise agreement or any addendum thereto. See Louisiana Revised Statutes 32:1252
- Manufacturer: means any person, resident or nonresident, who fabricates, manufactures, or assembles motor vehicles, recreational products, or new, remanufactured, reconditioned, or rebuilt motor vehicle or marine motors. See Louisiana Revised Statutes 32:1252
- Marine dealer: means any person who holds a bona fide contract or franchise with a manufacturer or distributor of marine products, except for either of the following:
(a) A person engaged in the business of renting or selling new or used watercraft or boats adapted to be powered only by an occupant's energy and who holds a license as a recreational products dealer pursuant to the provisions of this Chapter. See Louisiana Revised Statutes 32:1252
- Motor vehicle: means any motor driven car, van, or truck required to be registered which is used, or is designed to be used, for the transporting of passengers or goods for public, private, commercial, or for hire purposes. See Louisiana Revised Statutes 32:1252
- Motor vehicle dealer: means any person, not excluded by Subparagraph (b) of this Paragraph who holds a bona fide franchise in effect with a manufacturer or distributor of new motor vehicles, and a license under the provisions of this Chapter or a subsidiary of any such entity. See Louisiana Revised Statutes 32:1252
- Motorcycle: means a motor vehicle having a seat or saddle for the use of the rider and designed to travel on not more than three wheels in contact with the ground but excluding a tractor, electric-assisted bicycle, and electric-powered scooters not required to be registered. See Louisiana Revised Statutes 32:1252
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: shall mean any natural or juridical person, firm, association, corporation, trust, partnership, limited liability partnership, professional liability corporation, or limited liability company or any other legal entity. See Louisiana Revised Statutes 32:1252
- recreational vehicle: includes new and used motor homes, new and used travel trailers, new and used fifth-wheel travel trailers, new and used folding camper trailers, and slide-in truck campers. See Louisiana Revised Statutes 32:1252
- Vehicle: means any motor vehicle, specialty vehicle, or recreational product subject to regulation by this Chapter. See Louisiana Revised Statutes 32:1252
A.(1) The terms of the franchise notwithstanding, any dealer may appoint by will, or other written instrument, a designated successor to succeed in the ownership interest of the dealer in the dealership upon the death or incapacity of the dealer.
(2) Unless good cause exists for refusal to honor the succession on the part of the manufacturer or distributor, any designated successor of a deceased or incapacitated dealer of a dealership may succeed to the ownership of the dealership under the existing franchise if:
(i) The designated successor gives the manufacturer or distributor written notice of his or her intention to succeed to the ownership of the dealer within sixty days of the dealer’s death or incapacity.
(ii) The designated successor agrees to be bound by all the terms and conditions of the franchise.
(3) The manufacturer or distributor may request, and the designated successor shall provide, promptly upon such request, personal and financial data reasonably necessary to determine whether the succession should be honored.
(4) If a manufacturer or distributor believes that good cause exists for refusing to honor the succession of a deceased or incapacitated dealer, the manufacturer or distributor may, not more than sixty days following receipt of notice of the designated successor’s intent to succeed and receipt of such personal or financial data, serve upon the designated successor notice of its refusal to honor the succession and of its intent to discontinue the existing franchise with the dealer not earlier than six months from the date such notice is served.
(5) The notice must state the specific grounds for the refusal to honor the succession.
(6) If notice of refusal and discontinuance is not timely served upon the designated successor, the franchise shall continue in effect subject to termination only as otherwise permitted by this Chapter.
(7) In determining whether good cause for the refusal to honor the succession exists, the manufacturer or distributor has the burden of proving that the designated successor is not of good moral character or does not otherwise meet the manufacturer’s or distributor’s reasonable standards as a franchisee.
(8) If a manufacturer or distributor refuses to honor the succession to the ownership interest of a deceased or incapacitated owner for good cause, then and in such event:
(i) The manufacturer or distributor shall allow the designated successor a reasonable period of time which shall not be less than six months in which to consummate a sale of the dealership. Any such sale shall be subject to La. Rev. Stat. 32:1261(A)(1)(d).
(ii) Upon termination of the franchise pursuant to such refusal, the provisions of La. Rev. Stat. 32:1268 shall apply.
B. In the event of a proposed sale or transfer of a dealership and if the franchise agreement has a right of first refusal in favor of the manufacturer or distributor, then, notwithstanding the terms of the franchise agreement, the manufacturer or distributor shall be permitted to exercise a right of first refusal to acquire the motor vehicle dealer’s assets or ownership if all of the following requirements are met:
(1) In order to exercise its right of first refusal, the manufacturer or distributor shall notify the motor vehicle dealer in writing within sixty days of his receipt of the completed proposal for the proposed sale or transfer and all related agreements.
(2) The applicability of La. Rev. Stat. 32:1261(A)(1)(l) shall not be expanded or changed.
(3) The exercise of the right of first refusal will result in the dealer receiving the same or greater consideration as he has contracted to receive in connection with the proposed change of ownership or transfer.
(4) The proposed sale or transfer of the dealership’s assets does not involve the transfer or sale to a member or members of the family of one or more dealers, or to a qualified manager with at least two years management experience at the dealership of one or more of these dealers, or to a partnership or corporation controlled by such persons.
(5)(a) The manufacturer or distributor agrees to pay the reasonable expenses, including attorney fees which do not exceed the usual, customary, and reasonable fees charged for similar work done for other clients, incurred by the proposed owner or transferee prior to the manufacturer’s or distributor’s exercise of its right of first refusal in negotiating and implementing the contract for the proposed sale or transfer of the dealership or dealership assets. Such expenses and attorney fees shall be paid to the proposed new owner or transferee at the time of closing of the sale or transfer for which the manufacturer or distributor exercised its right of first refusal.
(b) No payment of such expenses and attorney fees shall be required if the new owner or transferee has not submitted or caused to be submitted an accounting of those expenses within thirty days of the dealer’s receipt of the manufacturer’s or distributor’s written request for such an accounting. A manufacturer or distributor may request such accounting before exercising his right of first refusal.
(6) The dealer shall not have any liability to any person as a result of a manufacturer’s exercising its right of first refusal and the manufacturer or distributor shall assume the defense of the selling dealer for any claim by the proposed owner or transferee arising from the exercise of the right of first refusal.
C. The provisions of this Section shall not apply to the succession of any marine dealer, motorcycle or all-terrain vehicle, or recreational vehicle.
Acts 2005, No. 500, §1, eff. July 12, 2005; Acts 2012, No. 326, §1.