New Motorboat Distributor Act

140
13-14c-101
13-14c-102
13-14c-103
13-14c-104
13-14c-105
13-14c-201
13-14c-202
13-14c-203
13-14c-204
13-14c-301
13-14c-302
13-14c-303
13-14c-304
13-14c-305
13-14c-306
13-58-101
13-58-102
13-58-201
13-58-301
13-58-302
13-58-401
13-58-402
0
New Motorboat Distributor Act
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Chris H. Wilson
House Sponsor: Steve Eliason
LONG TITLE
General Description:
This bill enacts the New Motorboat Distributor Act.
Highlighted Provisions:
This bill:
defines terms;
grants the executive director of the Department of Commerce authority to administer and
enforce the chapter and conduct adjudicative proceedings, issue cease-and-desist orders,
and impose administrative fines of up to $1,000 per day for violations;
prohibits certain coercive, unfair, or inequitable business practices by motorboat
distributors;
establishes standards governing the sale, transfer, and succession of motorboat
dealerships;
restricts termination, nonrenewal, relocation, or establishment of a motorboat dealership
without good cause, notice, and opportunity for administrative review;
establishes evidentiary standards for determining good cause;
requires a distributor to provide written warranty, recall, and service policies and to
reimburse a dealership;
requires a distributor to compensate a dealership for incidental labor, administrative tasks,
and on-water testing related to warranty and recall repairs;
requires a distributor, upon termination or discontinuance, to repurchase certain
inventory, parts, tools, equipment, signs, and related property;
provides a private right of action for a violation of the chapter;
governs changes in distribution plans;
recognizes and limits sub-distributee agreements; and
repeals the Motorboat Agreements Act.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
ENACTS:
13-14c-101
, Utah Code Annotated 1953
13-14c-102
, Utah Code Annotated 1953
13-14c-103
, Utah Code Annotated 1953
13-14c-104
, Utah Code Annotated 1953
13-14c-105
, Utah Code Annotated 1953
13-14c-201
, Utah Code Annotated 1953
13-14c-202
, Utah Code Annotated 1953
13-14c-203
, Utah Code Annotated 1953
13-14c-204
, Utah Code Annotated 1953
13-14c-301
, Utah Code Annotated 1953
13-14c-302
, Utah Code Annotated 1953
13-14c-303
, Utah Code Annotated 1953
13-14c-304
, Utah Code Annotated 1953
13-14c-305
, Utah Code Annotated 1953
13-14c-306
, Utah Code Annotated 1953
REPEALS:
13-58-101
, as enacted by Laws of Utah 2021, Chapter 185
13-58-102
, as enacted by Laws of Utah 2021, Chapter 185
13-58-201
, as enacted by Laws of Utah 2021, Chapter 185
13-58-301
, as enacted by Laws of Utah 2021, Chapter 185
13-58-302
, as last amended by Laws of Utah 2022, Chapter 274
13-58-401
, as enacted by Laws of Utah 2021, Chapter 185
13-58-402
, as enacted by Laws of Utah 2021, Chapter 185
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
13-14c-101
is enacted to read:
14c. New Motorboat Distributor
1. General Provisions
13-14c-101
. Definitions.
As used in this chapter:
(1)
"Affected municipality" means an incorporated city or town:
(a)
located in the notice area; and
(b)
where a distributor proposes to establish a new or relocated motorboat distributee
within the notice area of an existing distributee of the same line-make owned by a
different distributee.
(2)
"Affiliate" means the same as that term is defined in Section
16-10a-102
.
(3)
"Aftermarket product" means a product or a service that is not included in the retail
price that the distributor suggests.
(4)
"Dealership" means a location in the state that is a new motorboat distributee's place of
business.
(5)
"Department" means the Department of Commerce created in Section
13-1-2
.
(6)
"Distributee" means a person that a distributor permits to purchase, sell, or offer to sell a
new motorboat the distributor manufactures, produces, represents, or distributes.
(7)
"Distributor" means a person that permits a distributee to purchase, sell, or offer to sell a
new motorboat the distributor manufactures, produces, represents, or distributes, and
includes:
(a)
the manufacturer, producer, assembler, or distributor of a new motorboat;
(b)
an intermediate distributor; and
(c)
an agent, officer, or field or area representative of the distributor.
(8)
"Distributorship agreement" means a written agreement in which:
(a)
a distributor grants to a distributee permission to use a trade name, trademark, service
mark, or related characteristic; and
(b)
a community of interest exists in the marketing of new motorboats and new
motorboat parts and services related to the sale or lease of new motorboats at
wholesale or retail.
(9)
"Executive director" means the executive director of the Department of Commerce.
(10)
"Line-make" means a brand that the distributor offers for sale, lease, or distribution
under a common name, trademark, service mark, or brand name.
(11)
(a)
"Motorboat" means a watercraft that is propelled primarily by a self-contained
mechanical engine with at least 50 horsepower that produces thrust directly for
movement on water and is at least 14 feet in length.
(b)
"Motorboat" includes:
(i)
an inboard-powered boat;
(ii)
a stern drive boat;
(iii)
an outboard-powered boat;
(iv)
a wake boat;
(v)
a ski boat;
(vi)
a runabout;
(vii)
a cabin cruiser;
(viii)
a center console;
(ix)
a pontoon boat; and
(x)
a jet boat.
(c)
"Motorboat" does not include:
(i)
a human or wind powered watercraft regardless of the presence of a secondary
motor;
(ii)
a personal watercraft;
(iii)
a houseboat;
(iv)
a vessel that is primarily intended to be towed;
(v)
a vessel that is:
(A)
in the same line-make as a personal watercraft; and
(B)
distributed in accordance with a common distribution agreement which
includes the vessel line-make and the personal watercraft; and
(vi)
a dock.
(12)
(a)
"Motorboat trailer" means a vehicle, frame, or device that is designed,
manufactured, or modified to tow a motorboat over land.
(b)
"Motorboat trailer" includes a trailer that:
(i)
is equipped with bunks, rollers, cradles, guides, or other structural components
specifically to support the hull of a motorboat; and
(ii)
is used in launching, retrieving, storing, or transporting a motorboat.
(13)
"New motorboat" means a motorboat that has not been titled or registered and has less
than 150 engine hours.
(14)
"New motorboat distributee" means a person that is registered to sell a new motorboat
under Section
13-14c-103
.
(15)
"Notice area" means the geographic area that is within a radius of 50 miles from the
site of an existing dealership of the same line-make.
(16)
"Personal watercraft" means the same as that term is defined in Section 73-18-2.
(17)
"Primary market area" means:
(a)
for an existing dealership, the geographic area a distributor establishes for an existing
dealership of the same line-make to serve; or
(b)
for a new or relocated dealership, the geographic area a distributor proposes for a
new or relocated dealership of the same line-make to serve.
(18)
"Recall" means a determination that a distributor or the United States Coast Guard
makes that a motorboat:
(a)
contains a safety-related defect; or
(b)
fails to comply with a federal safety or emissions standard.
(19)
"Recall repair" means any reasonable diagnostic work, labor, or part necessary to
resolve an issue that is the basis of a recall.
(20)
"Sale, transfer, or assignment" means the disposition of an interest in a dealership, with
or without consideration, through a bequest, inheritance, gift, exchange, lease, or license.
Section 2. Section
13-14c-102
is enacted to read:
13-14c-102
. Powers and duties of the executive director.
(1)
The executive director shall:
(a)
administer and enforce this chapter; and
(b)
make rules for the administration of this chapter in accordance with Title 63G,
Chapter 3, Utah Administrative Rulemaking Act.
(2)
(a)
The executive director may conduct an adjudicative proceeding under this chapter
in accordance with Title 63G, Chapter 4, Administrative Procedures Act.
(b)
In an adjudicative proceeding under this chapter, an order the executive director
issues shall comply with Section
63G-4-208
, whether the proceeding is a formal or
an informal adjudicative proceeding under Title 63G, Chapter 4, Administrative
Procedures Act.
(3)
The department shall make the executive director's order available to the public.
Section 3. Section
13-14c-103
is enacted to read:
13-14c-103
. Registration -- Fees.
(1)
A distributee or distributor doing business in the state shall:
(a)
annually register or renew the distributee or the distributor's registration with the
department in a form the department approves; and
(b)
pay an annual registration fee in an amount the department determines in accordance
with Sections
13-1-2
and
63J-1-504
.
(2)
The department shall register or renew the registration of a distributee or a distributor if
the distributee or distributor complies with this chapter and the rules the department
makes under this chapter.
(3)
A distributee or distributor registered under this section shall comply with this chapter
and the rules the department makes to enforce this chapter.
(4)
The department shall collect and deposit
the fee Subsection
(1)(b)
imposes into the
Commerce Service Account created by Section
13-1-2
.
(5)
Notwithstanding Subsection (1), an agent, officer, or field or area representative of a
distributor does not need to register under this section if the distributor holds a valid
registration under this section.
Section 4. Section
13-14c-104
is enacted to read:
13-14c-104
. Administrative proceedings commenced by the agency.
(1)
Except as provided in Subsection (3), if the executive director finds that a person has
violated this chapter or a rule the department makes under this chapter, the executive
director may:
(a)
notify the person of the alleged violation of this chapter or a rule; and
(b)
schedule an adjudicative hearing under Section 63G-4-201.
(2)
(a)
In determining the amount and appropriateness of an administrative fine under
Subsection (1), the executive director shall consider:
(i)
the gravity of the violation;
(ii)
the history of previous violations; and
(iii)
any attempt the person makes to retaliate against another person for seeking
relief under this chapter or other federal or state law relating to the motorboat
industry.
(b)
In addition to any other action permitted under Subsection (1), the department may
file an action with a court enforcing the executive director's order and pursue the
executive director's assessment of a fine in an amount not to exceed $1,000 for each
day a person violates the executive director's order.
(3)
(a)
In addition to the grounds described in Subsection
63G-4-502(1)
for issuing an
emergency order, the executive director may issue an order on an emergency basis if
the executive director determines that irreparable damage is likely to occur
immediately if the executive director takes no action.
(b)
In issuing an emergency order under Subsection (3)(a), the executive director shall
comply with the requirements of Subsections
63G-4-502(2)
and
(3)
.
Section 5. Section
13-14c-105
is enacted to read:
13-14c-105
. Administrative proceedings -- Request for agency action.
(1)
(a)
A person may commence an adjudicative proceeding in accordance with this
chapter and Title 63G, Chapter 4, Administrative Procedures Act, to:
(i)
remedy an alleged violation of this chapter;
(ii)
obtain approval of an act this chapter regulates; or
(iii)
obtain a determination that this chapter specifically authorizes.
(b)
A person may file a request for agency action in accordance with Section
63G-4-201

to commence an adjudicative proceeding.
(2)
The executive director shall review a request for an adjudicative proceeding and notify
the requesting party whether the request is granted or denied in accordance with
Subsection 63G-4-201(3).
(3)
If there is an adjudicative proceeding, the executive director shall apportion in a fair and
equitable manner between the parties the costs of the adjudicative proceeding, including
reasonable attorney fees.
Section 6. Section
13-14c-201
is enacted to read:
2. Distributors in General
13-14c-201
. Prohibited acts by distributors -- Affiliates -- Disclosures.
(1)
A distributor may not:
(a)
except as provided in Subsection
(2)
, require a distributee to order or accept delivery
of any new motorboat or other item that the distributee did not voluntarily order;
(b)
require a distributee to refrain from acquiring any other line of new motorboats or
products;
(c)
require, coerce, or attempt to coerce a distributee to enter into an agreement with the
distributor or do any other unfair or prejudicial act to the distributee;
(d)
change, establish, enforce, modify, or implement a plan or system for allocating,
scheduling, or delivering new motorboats, parts, or accessories to the distributor's
distributees so that the plan or system is not fair, reasonable, and equitable;
(e)
increase the price of a new motorboat that the distributee has ordered from the
distributor if the order occurred before the distributee received an official written
price increase notification;
(f)
engage in the distribution, sale, offer for sale, or lease of a new motorboat to
purchasers who acquire the motorboat in the state except through a distributee
located in the notice area of the purchaser;
(g)
authorize or permit a person to perform warranty service repairs on motorboats,
unless the repairs are performed by a distributee with a distributorship agreement for
the sale and service of the distributor's motorboats within the notice area where the
dealership is located;
(h)
fail to provide a distributee with a written distributorship agreement;
(i)
directly or indirectly own an interest in a new motorboat distributee or dealership,
operate or control a new motorboat distributee or dealership, act in the capacity of a
new motorboat distributee, or operate a motorboat service facility;
(j)
fail to pay a distributee for a reimbursement for an incentive or other payment the
distributor owes in accordance with a written distributorship agreement;
(k)
use a performance standard, incentive program, or similar method to measure a
distributee's performance unless the standard or program:
(i)
is designed and administered fairly and equitably;
(ii)
if based upon a survey, utilizes a statistically valid sample; and
(iii)
if the distributee requests it, is disclosed and explained in writing to the
distributee, including how the standard or program is designed and administered,
and the types of data that will be collected and used;
(l)
through an affiliate, take an action that this chapter otherwise prohibits;
(m)
impose a fee, surcharge, or other charge on a distributee designed to recover the cost
of a warranty repair or any other cost in this chapter or the dealership agreement for
which the distributor owes the distributee;
(n)
deny a distributee the right to return any or all parts or accessories that are in good,
resalable condition and that are listed in the current parts catalog;
(o)
obtain a waiver of a distributee's right from a distributee by threatening to impose a
detriment upon the distributee's business, or to withhold any entitlement, benefit, or
service to which the distributee is entitled in accordance with the distributorship
agreement, contract, statute, rule, regulation, or law, or that the distributor has
granted to more than one other distributee of the distributor in the state;
(p)
fail to provide reasonable compensation to a distributee for assistance requested by a
customer whose motorboat was subjected to an over the air or remote change, repair,
or update to any part, system, accessory, or function by the distributor or affiliate and
performed at the distributee's dealership to satisfy the customer; or
(q)
ship a new motorboat to a distributee without receiving prior written confirmation
from the distributee authorizing the shipment of that specific motorboat.
(2)
Subsection
(1)(a)
does not prevent the distributor from requiring that a distributee carry
a reasonable inventory of:
(a)
new motorboat models offered for sale by the distributor as long as the inventory
levels are supported by market demand; and
(b)
parts to service the repair of the new motorboats.
Section 7. Section
13-14c-202
is enacted to read:
13-14c-202
. Sale or transfer of ownership.
(1)
(a)
The distributor shall give effect to the change in a distributorship agreement as a
result of an event listed in Subsection
(1)(b)
:
(i)
subject to Subsection
13-14c-303(2)(b)
; and
(ii)
unless exempted under Subsection
(2)
.
(b)
The distributor shall give effect to the change in a distributorship agreement in
accordance with Subsection
(1)(a)
for the:
(i)
sale of a distributee's dealership;
(ii)
contract for sale of a distributee's dealership; or
(iii)
transfer of full or partial ownership of a distributee's dealership by:
(A)
sale;
(B)
transfer of the business; or
(C)
stock transfer.
(2)
A distributor is exempted from the requirements of Subsection
(1)
if:
(a)
the transferee is denied or would be denied registration in accordance with Section
13-14c-103
; or
(b)
the proposed sale or transfer of the business will be substantially detrimental to the
distribution of the distributor's new motorboats or to competition in the notice area, if
the distributor has given written notice to the distributee within 60 days following
receipt by the distributor of the following:
(i)
a copy of the proposed contract of sale or transfer executed by the distributee and
the proposed transferee;
(ii)
a completed copy of the distributor's written application for approval of the
change in ownership, if any, including the information customarily required by the
distributor;
(iii)
a written agreement whereby the proposed transferee agrees to the terms and
conditions of the distributorship agreement; and
(iv)
(A)
a written description of the business experience of the transferee in the
case of a proposed sale or transfer of the distributee's business; or
(B)
a written description of the business experience and financial capacity of the
person principally involved in the proposed change of the dealership.
(3)
(a)
If, after receipt of the written notice from the distributee described in Subsection
(2)(b)
, the distributor objects to the proposed sale or transfer of the business or
change of executive management, the distributee may file a request for an
adjudicative proceeding in accordance with Section 63G-4-201, within 60 days from
the date of receipt of the distributor's objection notice.
(b)
If an adjudicative proceeding is initiated in accordance with Section 63G-4-201, the
executive director shall hold a hearing to determine whether:
(i)
a proposed transferee or change in executive management shall be approved or
denied for specified reasons; or
(ii)
a proposed transferee is approved if specific conditions are timely satisfied to
guarantee to the distributor that a proposed transferee is able to comply with the
conditions of the distributorship.
(c)
(i)
The distributee shall have the burden of proof with respect to all issues raised
by the distributee's application for a hearing as provided in this section.
(ii)
During the pendency of the hearing, not to exceed 90 days, the distributorship
agreement shall continue in effect in accordance with the distributorship
agreement's terms.
(4)
A distributor shall not unreasonably withhold approval of a proposed sale or transfer.
Section 8. Section
13-14c-203
is enacted to read:
13-14c-203
. Succession of a distributee.
(1)
(a)
A designated successor may succeed the distributee in the ownership and
operation of the dealership under the existing distributorship agreement if the
designated successor:
(i)
gives the distributor written notice of an intent to succeed to the rights of the
deceased or incapacitated distributee in the distributorship agreement within 180
days after the day of the distributee's death or incapacity;
(ii)
agrees to all of the terms and conditions of the distributorship agreement; and
(iii)
meets the criteria the distributor generally applies for a qualifying distributee.
(b)
A distributor may refuse to honor the existing distributorship agreement with the
designated successor for good cause.
(2)
(a)
The distributor may request in writing from a designated successor the personal
and financial data that is reasonably necessary to determine whether the distributor
should honor the existing distributorship agreement.
(b)
The designated successor shall supply the personal and financial data promptly upon
the distributor's request.
(3)
(a)
If a distributor believes that good cause exists for refusing to honor the requested
succession, the distributor shall serve upon the designated successor notice of the
distributor's refusal to approve the succession within 60 days after the later of:
(i)
receipt of the notice of the designated successor's intent to succeed the distributee
in the ownership and operation of the dealership; or
(ii)
receipt of the personal and financial data that the distributor requests.
(b)
Failure to serve the notice in accordance with Subsection
(3)(a)
is considered
approval of the designated successor and the distributorship agreement is considered
amended to reflect the approval of the succession the day following the last day the
distributor can serve notice under Subsection
(3)(a)
.
(4)
The notice required by Subsection
(3)
(a) shall:
(a)
state the specific grounds for the refusal to approve the succession; and
(b)
state that the discontinuance of the distributorship agreement shall take effect not
less than 180 days after the date the notice of refusal is served unless the proposed
successor files an application for hearing under Subsection
(6)
.
(5)
(a)
This section does not prevent a distributee from designating a person as the
successor by written instrument filed with the distributor.
(b)
If a distributee files a written instrument under Subsection
(5)(a)
, the written
instrument governs the succession rights to the management and operation of the
dealership subject to the designated successor satisfying the distributor's qualification
requirements as described in this section.
(6)
(a)
If a distributor serves a notice of refusal to a designated successor in accordance
with Subsection (3)(a), the designated successor may, within the 180-day period
provided in Subsection
(4)
, file with the executive director a request for an
adjudicative proceeding in accordance with Section 63G-4-201, whether good cause
exists for the refusal.
(b)
If a request for an adjudicative proceeding is timely filed and the executive director
grants the request, the distributor shall continue to honor the distributorship
agreement until after the executive director gives a decision and the applicable appeal
period following the executive director's decision has expired.
Section 9. Section
13-14c-204
is enacted to read:
13-14c-204
. Distributor's obligations relating to warranty and recall service.
(1)
(a)
A distributor shall provide to each distributee documentation that includes:
(i)
warranty coverage and duration;
(ii)
customer responsibilities;
(iii)
distributee responsibilities;
(iv)
claim procedures; and
(v)
distributor contact information.
(b)
The distributee shall provide the same documentation to each customer at the time of
sale.
(2)
A distributor shall provide each distributee registered as a new motorboat distributee in
the state with a written statement specifying:
(a)
the distributee's obligations regarding new motorboat preparation, delivery, warranty
service, and recalls for the distributor's products;
(b)
the schedule of compensation that the distributor will pay the distributee for
diagnostic work, parts, labor, and service; and
(c)
the time allowances applicable to the performance of work and service.
(3)
Time allowances described in Subsection
(2)
for the diagnosis and performance of
warranty work and service shall be reasonable and adequate for the work to be
performed.
(4)
(a)
As used in this Subsection
(4)
, "Qualified repair" means a repair to a motorboat
that would have come within the distributor's new motorboat warranty but for the
motorboat having exceeded the time qualifications of the warra
nty
.
(b)
Reasonable compensation of the distributee for parts and service in warranty or
recall repair work shall be in accordance with Subsection 13-14c-204(2).
(c)
A distributee seeking to establish or modify the distributee's retail labor rate, retail
parts markup, or both,
shall submit a notice
in writing or electronically to the
distributee's distributor at the location and in the format the distributor specifies in
writing to the distributee for repairs made no more than 180 days before the
submission:
(i)
all consecutive repair orders that include 50 sequential repair orders reflecting
qualified repairs; or
(ii)
all repair orders reflecting qualified repairs closed during any period of 90
consecutive days.
(d)
A distributee shall calculate the distributee's:
(i)
retail labor rate by determinging the total charges for labor in the qualified repairs
submitted
,
dividing that amount by the total number of hours in the qualified
repairs that generated the charges; and
(ii)
retail parts markup by determining the total charges for parts in the qualified
repairs submitted, dividing the amount by the distributee's total cost of the
purchase of the parts, subtracting one, and multiplying by 100 to produce a
percentage.
(e)
A distributee may not seek to establish or modify the distributee's:
(i)
labor rate, as described in Subsection 13-14c-204(2), more frequently than once in
a 12-month period; and
(ii)
total charges for parts more frequently than once in a 12-month period.
(f)
(i)
In addition to compensating a distributee for diagnostic work, labor, and parts
under this section, a distributor shall compensate the distributee for reasonable and
necessary tasks the distributee performs that are incidental to warranty repairs,
upon submission of an itemized statement, including:
(A)
assisting a customer with unhooking or hooking up the motorboat from a
motorboat trailer or towing vehicle;
(B)
removing, installing, or uncovering a protective cover, or accessing an interior
compartment to facilitate inspection or repair;
(C)
assisting a customer with retrieving the customer's motorboat from the
dealership after the distributee completes the repair; and
(D)
handling administrative or documentation tasks, including paperwork.
(g)
If a warranty repair requires an on-water performance evaluation to verify the
effectiveness of the repair or to properly perform a diagnosis, the distributor shall
compensate the distributee for reasonable costs the distributee incurs in conducting
the test, including:
(i)
labor time for test operation at a rate made in accordance with Subsection
13-14c-204(2);
(ii)
fuel or oil the test requires; and
(iii)
reasonable transportation costs to and from the testing location.
(5)
(a)
For any item that a distributor sells, supplies, or otherwise provides to a
distributee, including a motorboat trailer, an engine, a part, or an accessory sold or
bundled with a motorboat, the distributor shall:
(i)
provide full warranty support and coverage in accordance with this section and the
distributorship agreement, including any necessary technical assistance,
replacement parts, or repairs;
(ii)
compensate the distributee for all warranty-related work the distributee performs
at the distributee's retail labor rate and retail parts markup made in accordance
with Subsection 13-14c-204(2); and
(iii)
ensure that any warranty terms or conditions for
these items
are substantially
similar to those offered by the distributor in other states and disclosed to the
distributee in writing so that the distributee may properly administer and perform
the warranty obligations on behalf of the distribut
or
.
(b)
For any item that a distributor sells, supplies, or otherwise provides to a distributee,
including a motorboat trailer, an engine, a part, or an accessory sold with a
motorboat, the distributor may not disclaim or delegate warranty responsibility for
the items to a third party if the distributor is the entity that sold, supplied, or bundled
the items for the distributee.
(c)
(i)
For warranty purposes under this section, a motorboat trailer is deemed
included with the new motorboat if:
(A)
the new motorboat distributor invoices the distributee for the motorboat
trailer; or
(B)
the distributor offers a credit for ordering the motorboat without the motorboat
trailer and that credit is less than the distributee's wholesale price for the
motorboat trailer when purchased separately.
(ii)
A credit that is equal to or greater than the distributee's wholesale price for the
motorboat trailer does not cause the motorboat trailer to be deemed included for
warranty purposes.
(6)
A distributor shall:
(a)
perform any warranty obligation described in the distributor's written warranty policy;
(b)
include in each written notice of the distributor's recall to a new motorboat owner
and each distributee the expected date the necessary parts and equipment will be
available to the distributee for the correction of the defect; and
(c)
compensate a distributee for all reasonable diagnostic work, labor, and parts the
distributor requires to perform a recall repair in accordance with Subsections
(3)
and
(4)
in accordance with the distributorship agreement.
(7)
If a distributor denies a distributee's claim for a defective part, alleging that the part is
not defective, the distributor at the distributor's option shall:
(a)
return the part to the distributee at the distributor's expense; or
(b)
pay the distributee the cost of the part.
(8)
A distributor may deny a distributee's claim for warranty compensation or recall repair
compensation if:
(a)
the distributee lacks material documentation for the claim; or
(b)
the distributee files a claim that is fraudulent.
Section 10. Section
13-14c-301
is enacted to read:
3. Restrictions on Termination, Relocation, and Establishment of Distributors
13-14c-301
. Termination or discontinuance of a distributorship agreement.
(1)
Except as provided in Subsection
(2)
, a distributor may not terminate or refuse to
continue a distributorship agreement, or the rights to sell and service a line-make in
accordance with a distributorship agreement, whether through termination or
discontinuance of the distributorship agreement, termination or discontinuance of a
line-make, or otherwise, unless:
(a)
the distributee receives written notice from the distributor 60 days before the
effective date of termination or discontinuance setting forth the specific grounds for
termination or discontinuance that the distributor relies on to establish good cause for
the termination or discontinuance;
(b)
the distributor has good cause for termination or discontinuance, including:
(i)
fraud;
(ii)
evidence of customer harm;
(iii)
failure to meet and maintain financial standard obligations; or
(iv)
failure to meet clearly communicated performance standards; and
(c)
the distributor is willing and able to comply with Section
13-14c-304
.
(2)
A distributor may terminate a distributorship agreement, without complying with
Subsection
(1)
:
(a)
if the department confiscates or revokes the distributee's registration in accordance
with Section
13-14c-103
; or
(b)
upon a mutual written agreement of the distributor and distributee.
(3)
(a)
At any time before the effective date of termination or discontinuance of the
distributorship agreement, the distributee may request an adjudicative proceeding in
accordance with Section 63G-4-201, for a hearing on the merits, and following notice
to all parties concerned, the hearing shall be held within 30 days after the day on
which the executive director receives the request for an adjudicative proceeding.
(b)
A termination or discontinuance subject to a hearing under Subsection
(3)(a)
may not
become effective until:
(i)
final determination of the issue by the executive director; and
(ii)
the applicable appeal period has lapsed.
(4)
A distributee may voluntarily terminate the distributee's distributorship agreement if the
distributee provides written notice to the distributor at least 60 days before the
termination.
Section 11. Section
13-14c-302
is enacted to read:
13-14c-302
. Issuance of an additional distributorship agreement -- Relocation of
an existing distributorship agreement.
(1)
Except as provided in Subsection (6), a distributor shall provide the notice and
documentation required under Subsection
(3)
if the distributor seeks to:
(a)
enter into a distributorship agreement establishing a motorboat dealership within a
notice area where the same line-make is represented by another distributee; or
(b)
relocate an existing motorboat distributee.
(2)
In determining whether a new or relocated dealership is within a notice area where the
same line-make is represented by an existing dealership, the notice area is measured
from the closest property boundary line of the existing dealership to the closest property
boundary line of the new or relocated dealership.
(3)
(a)
If a distributor seeks to take an action listed in Subsection
(1)
, before taking the
action, the distributor shall, in writing, notify each distributee in that line-make in the
notice area.
(b)
The notice required by Subsection
(3)(a)
shall:
(i)
specify the intended action described under Subsection
(1)
;
(ii)
specify the good cause on which the distributor intends to rely for the action; and
(iii)
be delivered by registered or certified mail or by any form of reliable delivery
through which receipt is verifiable.
(4)
(a)
The executive director may require the distributor to provide:
(i)
(A)
any aggregate economic data and all existing reports, analyses, or opinions
based on the aggregate economic data that were relied on by the distributor in
reaching the decision to proceed with the action described in the notice; and
(B)
the aggregate economic data under Subsection (4)(a)(i)(A) includes:
(I)
motorboat registration data;
(II)
market penetration data; and
(III)
demographic data;
(ii)
written documentation that the distributor has in the distributor's possession that
the distributor intends to rely on in establishing good cause;
(iii)
a statement that describes in reasonable detail how the establishment of a new
distributee or the relocation of an existing distributee will affect the amount of
business transacted by other distributees of the same line-make in the notice area,
as compared to business available to the distributees; or
(iv)
a statement that describes in reasonable detail how the establishment of a new
distributee or the relocation of an existing distributee will be beneficial or
injurious to the public welfare or public interest.
(b)
The distributor is not required to disclose any documents under Subsection (4)(a) if:
(i)
the documents would be privileged under the Utah Rules of Evidence;
(ii)
the documents contain confidential proprietary information;
(iii)
the documents are subject to federal or state privacy laws;
(iv)
the documents are correspondence between the distributor and existing
distributees in that line-make in the notice area; or
(v)
the distributor reasonably believes that disclosure of the documents would violate:
(A)
the privacy of another distributee; or
(B)
Section 13-14c-201.
(c)
The distributor shall provide to each distributee in that line-make in the notice area a
copy of the information the distributor provides to the executive director in
accordance with Subsection (4)(a).
(5)
(a)
Within 30 days of receiving notice required by Subsection
(3)
, any distributee that
is required to receive notice under Subsection
(3)
may request an adjudicative
proceeding in accordance with Section 63G-4-201 to review the appropriateness of
the establishment or relocation of the dealership.
(b)
No later than 10 days after the day on which the request for an adjudicative
proceeding is filed, the department shall inform the distributor that:
(i)
a timely request for an adjudicative proceeding has been filed;
(ii)
a hearing may be scheduled;
(iii)
the distributor may not establish or relocate the proposed dealership until the
executive director holds a hearing and renders a decision in accordance with
Section 63G-4-201; and
(iv)
the distributor may not establish or relocate a proposed dealership if the
executive director determines that there is not good cause for permitting the
establishment or relocation of the dealership.
(6)
If multiple requests for an adjudicative proceeding in accordance with Section
63G-4-201 are filed under Subsection (5), hearings may be consolidated to expedite the
disposition of the issue.
(7)
Subsections
(1)
through (5) do not apply to a relocation of an existing or successor
distributee to a location that is:
(a)
within the same county and less than five miles from the existing location of the
existing or successor distributee's dealership; or
(b)
further away from a dealership of a distributee of the same line-make.
(8)
(a)
Relocation of an existing distributee's dealership in excess of 15 miles from the
dealership's existing location is considered the establishment of an additional
distributee in the line-make of the relocating distributee.
(b)
The reopening in a notice area of a dealership that has not been in operation is
considered the establishment of an additional motorboat distributee.
Section 12. Section
13-14c-303
is enacted to read:
13-14c-303
. Evidence to be considered in determining cause to terminate or
discontinue.
(1)
In determining whether a distributor has established good cause for the termination or
discontinuance of a distributorship agreement, the executive director shall consider:
(a)
the amount of business transacted by the distributee, as compared to business
available to the distributee;
(b)
the investment necessarily made and obligations incurred by the distributee in the
performance of the distributee's part of the distributorship agreement;
(c)
the permanency of the investment;
(d)
whether the termination or discontinuance would injure or benefit the public welfare
or public interest by disrupting the distributee's business;
(e)
whether the distributee has adequate motorboat sales and service facilities,
equipment, motorboat parts, and qualified service personnel to reasonably provide for
the needs of the consumer for the new motorboats handled by the distributee and has
been and is rendering adequate services to the public;
(f)
whether the distributee refuses to honor warranties of the distributor under which the
warranty service work is to be performed in accordance with the distributorship
agreement, if the distributor reimburses the distributee for the warranty service work;
(g)
failure by the distributee to comply with those requirements of the distributorship
agreement that are determined by the executive director to be:
(i)
reasonable;
(ii)
material; and
(iii)
not in violation of this chapter;
(h)
evidence of bad faith by the distributee in complying with those terms of the
distributorship agreement that are determined by the executive director to be:
(i)
reasonable;
(ii)
material; and
(iii)
not in violation of this chapter;
(i)
transfer of any ownership or interest in the distributorship agreement without first
obtaining approval from the distributor or the executive director;
(j)
fraud;
(k)
evidence of customer harm;
(l)
failure to meet and maintain financial standard obligations;
(m)
failure to meet clearly communicated performance standards; and
(n)
any other factor the executive director considers relevant.
(2)
Notwithstanding any distributorship agreement, the following do not constitute good
cause, as used in this chapter for the termination or discontinuance of a distributorship
agreement:
(a)
the sole fact that the distributor desires greater market penetration or more sales or
leases of new motorboats;
(b)
the change of ownership of the distributee or the change of executive management of
the distributee unless the distributor proves that the change of ownership or executive
management will be substantially detrimental to the distribution of the distributor's
motorboats; or
(c)
the fact that the distributee has justifiably refused or declined to participate in any
conduct covered by Section
13-14c-201
.
(3)
For purposes of Subsection
(2)
, "substantially detrimental" includes the failure of any
proposed transferee to meet the objective criteria applied by the distributor in qualifying
distributees at the time of application.
Section 13. Section
13-14c-304
is enacted to read:
13-14c-304
. Distributor's obligations upon termination or discontinuance of
distributorship agreement or line-make.
(1)
Upon the termination or discontinuance of a distributorship agreement or a line-make,
the distributor shall pay the distributee:
(a)
an amount calculated by:
(i)
including the distributee's cost of unsold motorboats that:
(A)
are in the distributee's inventory from the distributor's line-make; and
(B)
represent the current model year plus the immediately preceding model year
which the distributor continues to sell immediately before the time of
termination or discontinuance;
(ii)
adding any charges made by the distributor, for distribution, delivery, or taxes;
(iii)
adding the distributee's cost of any distributor accessories added on the
motorboat;
(iv)
subtracting all allowances paid or credited to the distributee by the distributor;
and
(v)
subtracting reasonable depreciation, use, wear and tear, and other diminution in
value in the distributee's inventory caused by the distributee.
(b)
the cost of all new, undamaged, and unsold supplies, parts, and accessories as set
forth in the distributor's catalog at the time of termination or discontinuance for the
supplies, parts, and accessories, less all allowances paid or credited to the distributee
by the distributor;
(c)
the fair market value, but not less than the distributee's depreciated acquisition cost
of each undamaged sign owned by the distributee that bears a common name, trade
name, or trademark of the distributor;
(d)
the fair market value, but not less than the distributee's depreciated acquisition cost,
of all special tools, equipment, and furnishings acquired from the distributor or
sources approved by the distributor that are in good and usable condition; and
(e)
the cost of transporting, handling, packing, and loading motorboats, supplies, parts,
accessories, signs, special tools, equipment, and furnishings.
(2)
The distributor shall pay directly to lines of credit, mortgages, or other lien holders, and
then pay the remaining amounts owed to the distributee as specified in Subsection
(1)

within 60 days after the tender of the property to the distributor if the distributee has
clear title to the property.
(3)
(a)
This section does not apply to a distributee's voluntary termination, termination of
a distributee's distributorship agreement for cause, or discontinuance of a distributee's
distributorship agreement that occurs as a result of the distributee's sale of the
distributee's business entity to a third party if the distributor contemporaneously
grants a distributorship agreement to the third party on terms and conditions that are
comparable to those of the termination or discontinuance of the distributorship
agreement.
(b)
Subsection
(3)(a)
may not be construed to impair a contractual right of a termination
or a discontinuance of the distributorship agreement or a related agreement with a
distributor or a distributor's affiliate, including a right to return unsold parts.
Section 14. Section
13-14c-305
is enacted to read:
13-14c-305
. Change in distribution plan.
(1)
If there is a change in the plan of distribution of a line-make that continues the
line-make, a distributor may not directly or indirectly cause a termination, a
cancellation, or a nonrenewal of a distributee's distributorship agreement.
(2)
Subsection
(1)
does not apply if the distributor offers the distributee a new
distributorship agreement that is substantially similar to the distributee's distributorship
agreement at the time the distributor changed the plan of distribution.
Section 15. Section
13-14c-306
is enacted to read:
13-14c-306
. Recognition and rights of a sub-distributee.
(1)
As used in this section:
(a)
"Existing sub-distributee agreement" means a written agreement that:
(i)
is in effect on or before May 6, 2026, under which a distributee authorizes another
person to sell, lease, or service a new motorboat on the distributee's behalf; and
(ii)
includes a renewal, extension, or replacement of that agreement that does not
materially alter the agreement's core economic substance or authorized scope of
activities.
(b)
"Sub-distributee" means a person authorized under an existing sub-distributee
agreement.
(2)
(a)
An existing sub-distributee agreement may continue according to the agreemen
t's

terms.
(b)
The enactment of this chapter may not be construed to modify the enforceability of
an existing sub-distributee agreement.
(3)
This chapter does not control disputes between a distributee and a sub-distributee.
(a)
Except as provided in this section, the existing sub-distributee agreement and
generally applicable law govern the rights, duties, remedies, and dispute-resolution
procedures between a distributee and a sub-distributee arising out of or relating to an
existing sub-distributee agreement.
(b)
Nothing in this chapter may be construed to apply the standards of the distributor and
a distributee relationship to a distributee and a sub-distributee relationship.
(4)
(a)
An existing sub-distributee agreement is the controlling agreement with respect to
the sub-distributee's authority to sell, lease, or service a new motorboat on the
distributee's behalf.
(b)
The existence of any direct communication, transaction, ordering process, warranty
or recall submission, incentive submission, or similar administrative interaction
between a distributor and a sub-distributee does not create a distributorship
agreement between the distributor and the sub-distributee.
(5)
(a)
After May 6, 2026, a distributee may not enter into, establish, or authorize a
sub-distributee agreement other than an existing sub-distributee agreement as defined
in Subsection
(1)(a)
.
(b)
A sub-distributee agreement created in violation of this Subsection
(5)
does not
create any rights, protections, remedies, or procedures under this chapter.
(6)
A sub-distributee may not independently file a complaint, request for agency action,
protest, or application for hearing under this chapter, and may not be a party entitled to
relief in an administrative proceeding under this chapter.
(7)
If an existing sub-distributee agreement expires, is not renewed, or is terminated, the
sub-distributee:
(a)
is not a distributee for purposes of this chapter; and
(b)
is not entitled to the rights, protections, remedies, or procedures provided to a
distributee under this chapter.
Section 16.
Repealer.
Title.
Definitions.
Agreement requirement -- Terms of agreements.
Motorboat dealer default.
Cure of default.
Termination or nonrenewal of agreement -- Notice -- Repurchase
obligations.
Termination without time to cure.
Section 17.
Effective Date.
This bill takes effect on
May 6, 2026
.
2-20-26 4:47 PM