Kansas Statutes 8-2445. Franchise agreements; prohibiting manufacturers from engaging in certain activities
Terms Used In Kansas Statutes 8-2445
- Dealer: means a vehicle dealer as defined by this act, unless the context otherwise requires. See Kansas Statutes 8-2401
- Distributor: means any person who sells or distributes for resale new vehicles to new vehicle dealers in this state or who maintains distributor representatives in this state. See Kansas Statutes 8-2401
- Factory branch: means any branch office maintained in this state by a first or second stage manufacturer for the sale of new vehicles to distributors, or for the sale of new vehicles to new vehicle dealers, or for directing or supervising, in whole or in part, its representatives in this state. See Kansas Statutes 8-2401
- Factory representative: means a representative employed by a first or second stage manufacturer or factory branch for the purpose of making or promoting the sale of its new vehicles to new vehicle dealers, or for supervising or contacting its new vehicle dealers or prospective new vehicle dealers with respect to the promotion and sale of such vehicles and parts or accessories for such vehicles. See Kansas Statutes 8-2401
- Franchise agreement: means any contract or franchise or any other terminology used to describe the contractual relationship between first or second stage manufacturers, distributors and vehicle dealers, by which:
(1) A right is granted one party to engage in the business of offering, selling or otherwise distributing goods or services under a marketing plan or system prescribed in substantial part by the other party, and in which there is a community of interest in the marketing of goods or services at wholesale or retail, by lease, agreement or otherwise; and
(2) the operation of the grantee's business pursuant to such agreement is substantially associated with the grantor's trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the grantor or an affiliate of the grantor. See Kansas Statutes 8-2401
- motor vehicle: includes micro utility trucks, as defined in Kan. See Kansas Statutes 8-2401
- New vehicle dealer: means any vehicle dealer who is a party to an agreement, with a first or second stage manufacturer or distributor, which agreement authorizes the vehicle dealer to sell, exchange or transfer new motor vehicles, trucks, motorcycles, or trailers or parts and accessories made or sold by such first or second stage manufacturer or distributor and obligates the vehicle dealer to fulfill the warranty commitments of such first or second stage manufacturer or distributor. See Kansas Statutes 8-2401
- Property: includes personal and real property. See Kansas Statutes 77-201
- Second stage manufacturer: means any person who assembles, installs or permanently affixes body, cab or special unit equipment to a chassis supplied by a first stage manufacturer, distributor or other supplier and sells the resulting new vehicles to new vehicle dealers for resale in this state. See Kansas Statutes 8-2401
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See Kansas Statutes 77-201
- vehicle: includes micro utility trucks, as defined in Kan. See Kansas Statutes 8-2401
- Vehicle dealer: means any person who: (1) For commission, money or other thing of value is engaged in the business of buying, selling or offering or attempting to negotiate a sale of an interest in vehicles; or (2) for commission, money or other thing of value is engaged in the business of buying, selling or offering or attempting to negotiate a sale of an interest in motor vehicles as an auction motor vehicle dealer as defined in subsection (bb); but does not include:
(A) Receivers, trustees, administrators, executors, guardians, or other persons appointed by or acting under the judgment or order of any court, or any bank, trustee or lending company or institution which is subject to state or federal regulations as such, with regard to its disposition of repossessed vehicles;
(B) public officers while performing their official duties;
(C) employees of persons enumerated in subparagraphs (A) and (B), when engaged in the specific performance of their duties as such employees;
(D) auctioneers conducting auctions for persons enumerated in subparagraphs (A), (B) or (C); or
(E) auctioneers who, while engaged in conducting an auction of tangible personal property for others, offer for sale: (i) Vehicles which have been used primarily in a farm or business operation by the owner offering the vehicle for sale, including all vehicles which qualified for a farm vehicle tag at the time of sale except vehicles owned by a business engaged primarily in the business of leasing or renting passenger cars; (ii) vehicles which meet the statutory definition of antique vehicles; or (iii) vehicles for no more than four principals or households per auction. See Kansas Statutes 8-2401
(a) As used in this section:
(1) “Manufacturer” means a first or second stage manufacturer of vehicles, factory branch, distributor or factory representative, officer or agent or any representative thereof;
(2) “substantial reimbursement” means an amount equal to or greater than the cost of the savings that would result if the dealer were to utilize a vendor of the dealer’s own selection instead of using the vendor identified by the manufacturer; and
(3) “goods” does not include moveable displays, brochures and promotional materials containing material subject to the intellectual property rights of the manufacturer.
(b) Notwithstanding the terms and conditions of any franchise agreement, including any policy, bulletin, practice or guideline with respect thereto or performance thereunder, and in addition to the other provisions of the vehicle dealers and manufacturers licensing act, Kan. Stat. Ann. § 8-2401 et seq., and amendments thereto:
(1) No manufacturer shall coerce or require any vehicle dealer to construct improvements to facilities or install new signs or other franchise or image elements that replace or substantially alter improvements, signs or franchise or image elements completed within the past 10 years that were required and approved by the manufacturer or one of its contractors or affiliates. For the purposes of this subsection, the term “substantially alter” does not include routine maintenance, including, but not limited to, interior painting that is reasonably necessary to keep a dealer facility in attractive condition.
(2) The 10-year period set forth under this section shall begin to run for a vehicle dealer, including that dealer’s successors and assigns, on the date that the manufacturer gave final written approval of the facility, facility improvements or installation of signs or other franchise or image elements or the date that the dealer receives a certificate of occupancy, whichever is later.
(3) (A) No manufacturer shall require a vehicle dealer to purchase goods or services to make improvements to the dealer’s facilities from a vendor selected, identified or designated by the manufacturer or one of its contractors or affiliates by agreement, program, incentive provision or bulletin or otherwise without allowing or making available to the dealer the option to obtain goods or services of substantially similar kind, quality and overall design from a vendor chosen by the dealer and approved by the manufacturer, except that approval by the manufacturer shall not be unreasonably withheld and the dealer’s option to select a vendor shall not be available if the manufacturer provides substantial reimbursement for the goods or services offered.
(B) This section is not intended to prohibit a manufacturer from requiring changes or updates to signs that contain the manufacturer brand, logo or other intellectual property protected by federal intellectual property law more frequently than every 10 years, provided the manufacturer offers the dealer compensation for the sign or pays for the sign if sign changes are required more than every five years.
(4) A manufacturer shall not use sales or service performance criteria for the purpose of canceling, terminating or non-renewing a franchise agreement or otherwise rely upon such criteria for purposes related to Kan. Stat. Ann. §§ 8-2414 or 8-2416, and amendments thereto, that fail to meet the requirements of this subsection. A standard measuring sales or service performance of any new vehicle dealer of the manufacturer shall not use criteria that:
(A) Are unfair, unreasonable, arbitrary or inequitable; or
(B) do not consider the relevant and material local and state or regional criteria, including prevailing economic conditions affecting the sales or service performance of a vehicle dealer or any relevant and material data and facts presented by the dealer in writing. Relevant and material criteria, data or facts include, but are not limited to: (i) Those motor vehicle dealerships of comparable size and comparable markets; (ii) demographics in the new vehicle dealer’s area; (iii) geographic and market characteristics in the new vehicle dealer’s area; (iv) the proximity of other new vehicle dealers of the same line and make; (v) the proximity of motor vehicle manufacturing facilities; (vi) the buying patterns and consumer preferences of motor vehicle purchases; and (vii) customer drive time and distance. If such performance measurement criteria are based in whole or in part on a survey, that survey must be based on a statistically significant and valid random sample or must survey a majority of new vehicle retail sales and warranty service customers of the dealer if the survey is one measuring customer satisfaction of the dealer’s sales or service operations. A manufacturer, contractor or common entity or an affiliate that enforces against any vehicle dealer any such performance measurement criteria shall, upon the request of the dealer, describe in writing to the dealer, in detail, how the performance measurement criteria were calculated and uniformly applied and shall also provide any data upon which it relied in reaching the performance standard and applying it to the dealer.
(c) This section shall be a part of and supplemental to the vehicle dealers and manufacturers licensing act.