Purpose

This bill aims to protect auto dealers from certain actions by manufacturers, distributors, or factory branches and to allow dealers to participate in auto shows. It updates and adds rules to ensure dealers can engage in auto shows and have clearer, more transparent processes for franchise changes.

Main Provisions

• Auto shows: The bill adds a new protection that manufacturers cannot prevent auto dealers from participating in auto shows described in the state auto show statute (Minnesota Statutes, section 168.27, subdivision 3.10a). This creates a formal right for dealers to take part in these shows.

• Expanded list of unlawful acts by manufacturers: The bill keeps a broad list of actions by manufacturers that would be unlawful under existing law (such as pressuring dealers to accept non-required deliveries, forcing purchases of promotional materials, or leveraging franchise terms in ways that harm the dealer) and adds the auto show participation prohibition as item k.

• Written denial with reasons (60-day rule): If a dealer requests a change to the franchise arrangement (such as changes to capital structure or executive management), the manufacturer must deliver a written denial with specific reasons addressing the established criteria within 60 days. If no written denial is provided in time, the change is deemed approved (consent).

• Capital, management, and non-compete safeguards: The bill reiterates limits on changing a dealer’s capital structure or executive management, and it requires reasons if a proposed change is denied. It also constrains certain restrictions that would prevent a dealer from changing executive management, so long as the dealer meets reasonable standards and operates within the franchise terms.

• Facilities and exclusivity: Reasonable facilities requirements remain, and exclusive facilities for a single manufacturer are not automatically required unless reasonable given circumstances or voluntarily agreed with compensation.

• Location changes and premises: The bill requires dealers to receive advance notice (180 days) before location changes or substantial premises alterations, and outlines expectations if such changes are needed during the agreement.

• Releases, waivers, and dispute provisions: The bill discourages forms of release, assignment, novation, waiver, or estoppel that would undermine a dealer’s rights under the franchise. It also preserves the right to bring disputes in state or federal courts rather than other forums.

• Notices and good-faith violations: If a dealer is alleged to violate franchise terms in good faith, that assessment does not automatically constitute a violation of the broader state franchise statutes.

Significant Changes to Existing Law

• Adds auto show participation as a protected activity for dealers, preventing manufacturers from blocking dealer attendance in auto shows.
• Introduces a clear 60-day written denial requirement with explanations for franchise-change decisions, or else the change is deemed approved.
• Reinforces that exclusive facility requirements must be reasonable and not imposed unilaterally.
• Establishes longer lead times (180 days) for required relocations or significant premises changes.
• Strengthens procedural protections around changes to capital structure and executive management, including prior notice and criteria-based denial explanations.
• Maintains and clarifies existing dealer rights while explicitly codifying the auto show protection within the unlawful acts by manufacturers.

Practical Implications

• For dealers: Greater ability to participate in auto shows; clearer timelines and criteria for changes to the franchise; more transparency from manufacturers when changes are proposed or denied.
• For manufacturers: Tighter rules to justify changes in dealer arrangements and stricter requirements for notice and written explanations; increased focus on fair treatment in dealership operations.

Relevant Terms - motor vehicle dealer - manufacturer - distributor - factory branch - auto show - Minn. Stat. 168.27, subd. 3.10a - 80E.12 (unlawful acts by manufacturers) - franchise - executive management control - capital structure - reasonable facilities requirements - exclusive facilities - dispute resolution - written denial - 60-day notice - 180 days notice - good faith violation - loss or waiver terms