Kentucky Statutes 190.047 – Transfer of motor vehicle sales franchise — Proposal to establish additional dealership or to relocate existing dealership
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(1) Unless a franchise specifically states to the contrary, no franchise or any interest in a franchise may be sold, transferred, or assigned without the approval of the manufacturer or distributor.
(2) A dealer desiring to sell, transfer, or assign all or any portion of his franchise shall submit a written proposal of the sale, transfer, or assignment to the manufacturer or distributor, and approval of the proposal shall not be arbitrarily or unreasonably withheld.
(3) The refusal of the manufacturer or the distributor to approve a proposed sale, transfer, or assignment shall be subject to review by the licensor, if a written application for review is filed with the licensor, with notice to the manufacturer or distributor, within thirty (30) days of the date of the refusal. The refusal shall not be final until the licensor, after a hearing has been held in accordance with the provisions of KRS Chapter 13B, has determined that the approval was not arbitrarily or unreasonably withheld.
(4) The burden of proof shall be on the dealer to show that the approval of the sale, transfer, or assignment of any interest in the franchise was arbitrarily or unreasonably withheld. Factors to be considered in determining whether the manufacturer or distributor acted arbitrarily or unreasonably shall include whether the basic financial and facility requirements of the franchise will be met by the proposed transfer, sale, or assignment and that the proposed purchaser, transferee, or assignee is capable of operating, managing, and supervising the operation of the business in question.
(5) Failure of the manufacturer or distributor to abide by the final order of the licensor or to continue the franchise in effect pending the final determination of the issue by the licensor shall be cause for the licensor to refuse to issue a subsequent license in the same county or franchise area to an applicant who will be selling the same motor vehicles as the former dealer for the same manufacturer or distributor.
(6) If a manufacturer, distributor, factory branch, or factory representative seeks to:
(a) Enter into a franchise establishing an additional new motor vehicle dealership facility;
(b) Establish an additional new motor vehicle dealership facility under an existing franchise; or
(c) Relocate an existing new motor vehicle dealership facility, within or into a relevant market area where the same line make is then represented,
the manufacturer, distributor, factory branch, or factory representative shall, in writing, first notify the licensor, and each new motor vehicle dealer in the line make in the relevant market area, of the intention to establish an additional new motor vehicle dealership facility, or to establish an additional new motor vehicle dealership facility under an existing franchise, or to relocate an existing new motor vehicle dealership facility within or into that market area. The relevant market area shall be a radius of ten (10) miles around an existing new motor vehicle dealership
facility. Within fifteen (15) days of receiving the notice, or within fifteen (15) days after the end of any appeal procedure provided by the manufacturer, distributor, factory branch, or factory representative, any new motor vehicle dealership may file with the licensor a protest to the establishment or relocation of the new motor vehicle dealership facility. When a protest is filed, the licensor shall inform the manufacturer, distributor, factory branch, or factory representative that a timely protest has been filed and that the manufacturer, distributor, factory branch, or factory representative shall not establish or relocate the proposed new motor vehicle dealership facility until the licensor has held a hearing in accordance with KRS Chapter 13B, if the licensor has determined that there is good cause for permitting the new motor vehicle dealership facility. For the purposes of this section, the reopening in a relevant market area of a new motor vehicle dealership that has not been in operation for two (2) years or more shall be deemed the establishment of an additional new motor vehicle dealership facility.
(7) In determining whether good cause has been established for entering into an additional franchise for the same line make, or establishing an additional new motor vehicle dealership facility under an existing franchise, or relocating an existing new motor vehicle dealership facility within or into a relevant market area where the same line make is then represented, the licensor shall take into consideration the existing circumstances, including, but not limited to:
(a) Permanency of the investment;
(b) Whether the new motor vehicle dealer of the same line make in that relevant market area is providing adequate competition and convenient consumer care for the motor vehicles of the line make in the market area, which shall include the adequacy of motor vehicle sales and service facilities, equipment, supply of vehicle parts, and qualified service personnel; and
(c) Growth, or decline in population and new car registrations in the relevant market areas.
In the case of the establishment of an additional new motor vehicle dealership facility under an existing franchise, good cause shall not be found if the additional facility fails to offer a range of service, including, but not limited to sales, service, parts, and financing.
(8) Any parties to a hearing by the licensor concerning the establishing or relocating of a new motor vehicle dealership shall have a right of judicial review of the final order in accordance with KRS Chapter 13B.
(9) The provisions of this section shall apply to the personal representative, executor, or administrator of the estate of an individual who had an interest in a franchise, or to the guardian or conservator of an individual who has been declared mentally disabled and who has that interest for one (1) year following appointment.
(10) The provisions of this section do not apply to:
(a) The relocation of an existing dealership within that dealer’s area of responsibility contained in its franchise agreement, provided the relocation is not within five (5) miles of a new motor vehicle dealer of the same line make;
or
(b) The relocation of an existing new motor vehicle dealership facility to a site that is further away from an existing dealership of the same line make.
Effective: July 15, 1996
History: Amended 1996 Ky. Acts ch. 111, sec. 6, effective July 15, 1996; and ch. 318, sec. 77, effective July 15, 1996. — Amended 1984 Ky. Acts ch. 357, sec. 6, effective July 13, 1984. — Amended 1982 Ky. Acts ch. 141, sec. 64, effective July 1, 1982; and ch. 373, sec. 8, effective July 15, 1982. — Amended 1974 Ky. Acts ch. 74, Art. IV, sec. 20(2). — Created 1972 Ky. Acts ch. 75, sec. 3.
Legislative Research Commission Note (7/15/96). This section was amended by 1996
Ky. Acts chs. 111 and 318 which do not appear to be in conflict and have been codified together.
Note: 1980 Ky. Acts ch. 396, sec. 69 would have amended this section effective July 1,
1982. However, 1980 Ky. Acts ch. 396 was repealed by 1982 Ky. Acts ch. 141, sec.
146, also effective July 1, 1982.
(2) A dealer desiring to sell, transfer, or assign all or any portion of his franchise shall submit a written proposal of the sale, transfer, or assignment to the manufacturer or distributor, and approval of the proposal shall not be arbitrarily or unreasonably withheld.
Terms Used In Kentucky Statutes 190.047
- Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
- Commission: means the Motor Vehicle Commission. See Kentucky Statutes 190.010
- Distributor: which means any person, firm, association, corporation, or trust, resident or nonresident, who in whole or in part offers for sale, sells, or distributes any new motor vehicle to new motor vehicle dealers, or who maintains factory representatives, or who controls any person, firm, association, corporation, or trust, resident or nonresident, who in whole or in part offers for sale, sells, or distributes any new motor vehicle to new motor vehicle dealers. See Kentucky Statutes 190.010
- Executor: A male person named in a will to carry out the decedent
- Factory branch: which means a branch office maintained by a manufacturer for the purpose of selling, or offering for sale, new motor vehicles to a distributor, wholesaler, or new motor vehicle dealer, or for directing or supervising, in whole or in part, factory or distributor representatives, and shall further include any sales promotion organization, whether the same be a person, firm, or corporation, which is engaged in promoting the sale of new motor vehicles in this state of a particular brand or make to new motor vehicle dealers. See Kentucky Statutes 190.010
- Factory representative: which means a representative employed by a manufacturer, distributor, or factory branch for the purpose of making or promoting for the sale of his or her, its, or their new motor vehicles, or for supervising or contracting with his or her, its, or their dealers, or prospective dealers. See Kentucky Statutes 190.010
- Franchise: means the agreement or contract between any new motor vehicle manufacturer, written or otherwise, and any new motor vehicle dealer that purports to fix the legal rights and liabilities of the parties to an agreement or contract, and pursuant to which the dealer purchases and resells the franchise product, along with any addendums to the franchise agreement. See Kentucky Statutes 190.010
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Licensor: means the commission. See Kentucky Statutes 190.010
- Manufacturer: means any person, partnership, firm, association, corporation, or trust, resident or nonresident, who manufactures or assembles new motor vehicles, or imports for distribution through distributors of new motor vehicles, or any partnership, firm, association, joint venture, corporation, or trust, resident or nonresident, which is controlled by the manufacturer. See Kentucky Statutes 190.010
- Motor vehicle: means every vehicle intended primarily for use and operation on the public highways that is self-propelled, including low-speed motor vehicles as defined in KRS §. See Kentucky Statutes 190.010
- Motor vehicle dealer: means any person not excluded by subsection (3) of this section, engaged in the business of selling, offering to sell, soliciting, or advertising the same, of new or used motor vehicles, or possessing motor vehicles for the purpose of resale, either on his or her own account, or on behalf of another, either as his or her primary business or incidental thereto. See Kentucky Statutes 190.010
- New motor vehicle: means a vehicle that is in the possession of the manufacturer, distributor, or wholesaler, or has been sold to the holders of a valid sales and service agreement, franchise, or contract, granted by the manufacturer, distributor, or wholesaler for the sale of the make of new vehicle, which is new, and on which the original title has not been issued from the franchised dealer. See Kentucky Statutes 190.010
- New motor vehicle dealer: means a vehicle dealer who holds a valid sales and service agreement, franchise, or contract, granted by the manufacturer, distributor, or wholesaler for the sale of the manufacturer's new motor vehicles. See Kentucky Statutes 190.010
- New motor vehicle dealership facility: means an established place of business which is being used or will be used primarily for the purpose of selling, buying, displaying, repairing, and servicing motor vehicles. See Kentucky Statutes 190.010
- Sale: means the issuance, transfer, agreement for transfer, exchange, lease, pledge, hypothecation, mortgage in any form, whether by transfer in trust or otherwise, of any motor vehicle or interest in it, or of any franchise related to it, as well as any option, subscription, other contract, or solicitation looking to a sale, offer to attempt to sell in any form, whether spoken or written. See Kentucky Statutes 190.010
- Year: means calendar year. See Kentucky Statutes 446.010
(3) The refusal of the manufacturer or the distributor to approve a proposed sale, transfer, or assignment shall be subject to review by the licensor, if a written application for review is filed with the licensor, with notice to the manufacturer or distributor, within thirty (30) days of the date of the refusal. The refusal shall not be final until the licensor, after a hearing has been held in accordance with the provisions of KRS Chapter 13B, has determined that the approval was not arbitrarily or unreasonably withheld.
(4) The burden of proof shall be on the dealer to show that the approval of the sale, transfer, or assignment of any interest in the franchise was arbitrarily or unreasonably withheld. Factors to be considered in determining whether the manufacturer or distributor acted arbitrarily or unreasonably shall include whether the basic financial and facility requirements of the franchise will be met by the proposed transfer, sale, or assignment and that the proposed purchaser, transferee, or assignee is capable of operating, managing, and supervising the operation of the business in question.
(5) Failure of the manufacturer or distributor to abide by the final order of the licensor or to continue the franchise in effect pending the final determination of the issue by the licensor shall be cause for the licensor to refuse to issue a subsequent license in the same county or franchise area to an applicant who will be selling the same motor vehicles as the former dealer for the same manufacturer or distributor.
(6) If a manufacturer, distributor, factory branch, or factory representative seeks to:
(a) Enter into a franchise establishing an additional new motor vehicle dealership facility;
(b) Establish an additional new motor vehicle dealership facility under an existing franchise; or
(c) Relocate an existing new motor vehicle dealership facility, within or into a relevant market area where the same line make is then represented,
the manufacturer, distributor, factory branch, or factory representative shall, in writing, first notify the licensor, and each new motor vehicle dealer in the line make in the relevant market area, of the intention to establish an additional new motor vehicle dealership facility, or to establish an additional new motor vehicle dealership facility under an existing franchise, or to relocate an existing new motor vehicle dealership facility within or into that market area. The relevant market area shall be a radius of ten (10) miles around an existing new motor vehicle dealership
facility. Within fifteen (15) days of receiving the notice, or within fifteen (15) days after the end of any appeal procedure provided by the manufacturer, distributor, factory branch, or factory representative, any new motor vehicle dealership may file with the licensor a protest to the establishment or relocation of the new motor vehicle dealership facility. When a protest is filed, the licensor shall inform the manufacturer, distributor, factory branch, or factory representative that a timely protest has been filed and that the manufacturer, distributor, factory branch, or factory representative shall not establish or relocate the proposed new motor vehicle dealership facility until the licensor has held a hearing in accordance with KRS Chapter 13B, if the licensor has determined that there is good cause for permitting the new motor vehicle dealership facility. For the purposes of this section, the reopening in a relevant market area of a new motor vehicle dealership that has not been in operation for two (2) years or more shall be deemed the establishment of an additional new motor vehicle dealership facility.
(7) In determining whether good cause has been established for entering into an additional franchise for the same line make, or establishing an additional new motor vehicle dealership facility under an existing franchise, or relocating an existing new motor vehicle dealership facility within or into a relevant market area where the same line make is then represented, the licensor shall take into consideration the existing circumstances, including, but not limited to:
(a) Permanency of the investment;
(b) Whether the new motor vehicle dealer of the same line make in that relevant market area is providing adequate competition and convenient consumer care for the motor vehicles of the line make in the market area, which shall include the adequacy of motor vehicle sales and service facilities, equipment, supply of vehicle parts, and qualified service personnel; and
(c) Growth, or decline in population and new car registrations in the relevant market areas.
In the case of the establishment of an additional new motor vehicle dealership facility under an existing franchise, good cause shall not be found if the additional facility fails to offer a range of service, including, but not limited to sales, service, parts, and financing.
(8) Any parties to a hearing by the licensor concerning the establishing or relocating of a new motor vehicle dealership shall have a right of judicial review of the final order in accordance with KRS Chapter 13B.
(9) The provisions of this section shall apply to the personal representative, executor, or administrator of the estate of an individual who had an interest in a franchise, or to the guardian or conservator of an individual who has been declared mentally disabled and who has that interest for one (1) year following appointment.
(10) The provisions of this section do not apply to:
(a) The relocation of an existing dealership within that dealer’s area of responsibility contained in its franchise agreement, provided the relocation is not within five (5) miles of a new motor vehicle dealer of the same line make;
or
(b) The relocation of an existing new motor vehicle dealership facility to a site that is further away from an existing dealership of the same line make.
Effective: July 15, 1996
History: Amended 1996 Ky. Acts ch. 111, sec. 6, effective July 15, 1996; and ch. 318, sec. 77, effective July 15, 1996. — Amended 1984 Ky. Acts ch. 357, sec. 6, effective July 13, 1984. — Amended 1982 Ky. Acts ch. 141, sec. 64, effective July 1, 1982; and ch. 373, sec. 8, effective July 15, 1982. — Amended 1974 Ky. Acts ch. 74, Art. IV, sec. 20(2). — Created 1972 Ky. Acts ch. 75, sec. 3.
Legislative Research Commission Note (7/15/96). This section was amended by 1996
Ky. Acts chs. 111 and 318 which do not appear to be in conflict and have been codified together.
Note: 1980 Ky. Acts ch. 396, sec. 69 would have amended this section effective July 1,
1982. However, 1980 Ky. Acts ch. 396 was repealed by 1982 Ky. Acts ch. 141, sec.
146, also effective July 1, 1982.