Zero emissions vehicles/sale

AN ACT Relating to manufacturers and vehicle dealers; amending 1
RCW 46.70.011, 46.70.180, 46.96.010, 46.96.105, 46.96.140, 46.96.185, 2
and 46.96.230; and adding a new chapter to Title 46 RCW.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. It is the intent of the legislature with 5
this act to expand consumer access to zero emissions vehicles by 6
allowing direct sales from qualified zero emissions vehicle 7
manufacturers, while ensuring that traditional auto dealers are 8
supported in transitioning to a zero emissions vehicle-focused 9
market, and to balance innovation with consumer protection and 10
incentivize traditional auto dealers to increase zero emissions 11
vehicle sales.12
The legislature also intends to ensure fair protections and 13
practices for motor vehicle dealers, recognizing their vital role in 14
serving the needs of communities across the state. By establishing 15
fair reimbursement terms for warranty work; restricting 16
manufacturers' actions related to pricing, preorders, and 17
subscription services; and ensuring that incentive programs have 18
reasonable conditions, the legislature seeks to promote equitable and 19
transparent relationships between manufacturers and dealers.20
H-0706.1
HOUSE BILL 1721
State of Washington 69th Legislature 2025 Regular Session
By Representatives Doglio, McEntire, Penner, Fitzgibbon, Parshley,
Entenman, Kloba, and Zahn
Read first time 01/29/25. Referred to Committee on Consumer
Protection & Business.
p. 1 HB 1721
NEW SECTION. Sec. 2. The definitions in this section apply 1
throughout this chapter unless the context clearly requires 2
otherwise.3
(1) "Direct sales" means the sale or lease of a motor vehicle 4
directly from the manufacturer to the consumer and not from a new 5
motor vehicle dealer regulated under chapter 46.96 RCW.6
(2) "Qualified zero emissions vehicle manufacturer" means an 7
entity that exclusively manufactures zero emissions vehicles and has 8
no existing franchise agreements with new motor vehicle dealers 9
regulated under chapter 46.96 RCW. 10
(3) "Service center" means a facility for the maintenance and 11
repair of vehicles, including zero emissions vehicles.12
(4) "Traditional auto dealer" means a new motor vehicle dealer 13
operating under a franchise agreement under chapter 46.96 RCW and 14
selling or leasing both new gasoline-powered and new zero emissions 15
vehicles. 16
(5) "Zero emissions vehicle" means a vehicle that emits no 17
exhaust gas from the onboard source of power, other than water vapor.18
NEW SECTION. Sec. 3. A qualified zero emissions vehicle 19
manufacturer may provide direct sales of zero emissions vehicles if 20
it:21
(1) Establishes at least two service centers within the state; 22
and 23
(2) Provides a mobile service for vehicle owners within the 24
state, before the commencement of any direct sales of zero emissions 25
vehicles. 26
NEW SECTION. Sec. 4. (1) A qualified zero emissions vehicle 27
manufacturer may provide online direct sales of zero emissions 28
vehicles if such vehicles are delivered through a designated service 29
center, delivery center, or a partnered dealership as authorized 30
under section 6(3) of this act.31
(2) Any zero emissions vehicle sold via direct sales as 32
authorized under this chapter must include a warranty, in accordance 33
with chapter 19.118 RCW, covering repairs and maintenance at any 34
designated service center. 35
(3) A qualified zero emissions vehicle manufacturer must also 36
comply with chapter 19.86 RCW. 37
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NEW SECTION. Sec. 5. Until July 1, 2030, and subject to the 1
availability of amounts appropriated for these specific purposes, 2
any traditional auto dealer that achieves zero emissions vehicle 3
sales that account for at least 50 percent of its total annual 4
vehicle sales, consistent with zero emissions vehicle program 5
standards and rules adopted by the department of ecology, must 6
receive an additional 50 percent of the award received from the zero 7
emissions vehicle technician training and charging infrastructure 8
grant program created in and for the purposes listed in section 6 of 9
this act.10
NEW SECTION. Sec. 6. (1) Subject to the availability of amounts 11
appropriated for this specific purpose, the department of commerce 12
must establish a grant program to support zero emissions vehicle 13
technician training and charging infrastructure at traditional auto 14
dealerships and assist them in their transition to zero emissions 15
vehicle sales.16
(2) Program funds may only be used for: 17
(a) Publicly available zero emissions vehicle charging and supply 18
equipment infrastructure; and 19
(b) Employee training on zero emissions vehicle technology and 20
servicing. 21
(3) A qualified zero emissions vehicle manufacturer may partner 22
with traditional auto dealers to operate as service centers or 23
delivery partners for the direct sale of zero emissions vehicles. Any 24
traditional auto dealer that partners with a qualified zero emissions 25
vehicle manufacturer for the direct sale of zero emissions vehicles 26
is eligible for a one-time grant program award in an amount as 27
determined by the department of commerce to help cover the costs 28
associated with servicing zero emissions vehicles from qualified zero 29
emissions vehicle manufacturers. 30
(4) The department of commerce shall adopt rules as necessary to 31
implement the grant program. 32
NEW SECTION. Sec. 7. By July 1st of each year, beginning July 33
1, 2026, the department must review and report to the appropriate 34
committees of the legislature on the effectiveness of this chapter in 35
expanding zero emissions vehicle access while supporting traditional 36
auto dealers. The report due on July 1, 2034, must include a 37
recommendation on whether or not to retain, modify, or repeal the 38
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authorization of direct sales of zero emissions vehicles by qualified 1
zero emissions vehicle manufacturers under this chapter.2
Sec. 8. RCW 46.70.011 and 2016 sp.s. c 26 s 1 are each amended 3
to read as follows: 4
As used in this chapter: 5
(1) "Auction" means a transaction conducted by means of exchanges 6
between an auctioneer and the members of the audience, constituting a 7
series of oral invitations for offers for the purchase of vehicles 8
made by the auctioneer, offers to purchase by members of the 9
audience, and the acceptance of the highest or most favorable offer 10
to purchase. 11
(2) "Auction company" means a sole proprietorship, partnership, 12
corporation, or other legal or commercial entity licensed under 13
chapter 18.11 RCW that only sells or offers to sell vehicles at 14
auction or only arranges or sponsors auctions. 15
(3) "Buyer's agent" means any person, firm, partnership, 16
association, limited liability company, limited liability 17
partnership, or corporation retained or employed by a consumer to 18
arrange for or to negotiate, or both, the purchase or lease of a new 19
motor vehicle on behalf of the consumer, and who is paid a fee or 20
receives other compensation from the consumer for its services.21
(4) "Department" means the department of licensing, which shall 22
administer and enforce the provisions of this chapter.23
(5) "Director" means the director of licensing.24
(6) "Established place of business" means a location meeting the 25
requirements of RCW 46.70.023(1) at which a vehicle dealer conducts 26
business in this state. 27
(7) "Listing dealer" means a used mobile home dealer who makes 28
contracts with sellers who will compensate the dealer for obtaining a 29
willing purchaser for the seller's mobile home. 30
(8) "Manufacturer" means any person, firm, association, 31
corporation, or trust, resident or nonresident, who manufactures or 32
assembles new and unused vehicles or remanufactures vehicles in whole 33
or in part , or who directly or indirectly through one or more 34
intermediaries, controls, is controlled by, or is under the common 35
direction and possesses direct or indirect power to direct or cause 36
the direction of the management and policies of such person, firm, 37
association, corporation, or trust, resident or nonresident, and 38
further includes the terms: 39
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(a) "Distributor," which means any person, firm, association, 1
corporation, or trust, resident or nonresident, who in whole or in 2
part offers for sale, sells, or distributes any new and unused 3
vehicle to vehicle dealers or who maintains factory representatives.4
(b) "Factory branch," which means a branch office maintained by a 5
manufacturer for the purpose of selling or offering for sale, 6
vehicles to a distributor, wholesaler, or vehicle dealer, or for 7
directing or supervising in whole or in part factory or distributor 8
representatives, and further includes any sales promotion 9
organization, whether a person, firm, or corporation, which is 10
engaged in promoting the sale of new and unused vehicles in this 11
state of a particular brand or make to vehicle dealers.12
(c) "Factory representative," which means a representative 13
employed by a manufacturer, distributor, or factory branch for the 14
purpose of making or promoting for the sale of their vehicles or for 15
supervising or contracting with their dealers or prospective dealers.16
(9) "Motor vehicle" means every vehicle which is self-propelled 17
and every vehicle which is propelled by electric power obtained from 18
overhead trolley wires, but not operated upon rails, and which is 19
required to be registered and titled under this title.20
(10) "New motor vehicle" means any motor vehicle that is self-21
propelled and is required to be registered and titled under this 22
title, has not been previously titled to a retail purchaser or 23
lessee, and is not a "used vehicle" as defined under RCW 46.04.660.24
(11) "Principal place of business" means that dealer firm's 25
business location in the state, which place the dealer designates as 26
their principal place of business. 27
(12) "Recreational vehicle" means a travel trailer, motor home, 28
truck camper, or camping trailer that is primarily designed and used 29
as temporary living quarters, is either self-propelled or mounted on 30
or drawn by another vehicle, is transient, is not occupied as a 31
primary residence, and is not immobilized or permanently affixed to a 32
mobile home lot. 33
(13) "Retail vehicle dealer" means a vehicle dealer who may buy 34
and sell at both wholesale and retail. 35
(14) "Subagency" means any place of business of a vehicle dealer 36
within the state, which place is physically and geographically 37
separated from the principal place of business of the firm or any 38
place of business of a vehicle dealer within the state, at which 39
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place the firm does business using a name other than the principal 1
name of the firm, or both. 2
(15) "Temporary subagency" means a location other than the 3
principal place of business or subagency within the state where a 4
licensed vehicle dealer may secure a license to conduct the business 5
and is licensed for a period of time not to exceed ((ten)) 10 days 6
for a specific purpose such as auto shows, shopping center 7
promotions, tent sales, exhibitions, or similar merchandising 8
ventures. No more than six temporary subagency licenses may be issued 9
to a licensee in any ((twelve-month)) 12-month period.10
(16) "Vehicle" means and includes every device capable of being 11
moved upon a public highway and in, upon, or by which any persons or 12
property is or may be transported or drawn upon a public highway, 13
excepting devices moved by human or animal power or used exclusively 14
upon stationary rails or tracks. 15
(17) "Vehicle dealer" means any person, firm, association, 16
corporation, or trust, not excluded by subsection (18) of this 17
section, engaged in the business of buying, selling, listing, 18
exchanging, offering, brokering, leasing with an option to purchase, 19
auctioning, soliciting, or advertising the sale of new or used 20
vehicles, or arranging or offering or attempting to solicit or 21
negotiate on behalf of others, a sale, purchase, or exchange of an 22
interest in new or used motor vehicles, irrespective of whether the 23
motor vehicles are owned by that person. Vehicle dealers shall be 24
classified as follows: 25
(a) A "motor vehicle dealer" is a vehicle dealer that deals in 26
new or used motor vehicles, or both; 27
(b) A "mobile home and travel trailer dealer" is a vehicle dealer 28
that deals in mobile homes, park trailers, or travel trailers, or 29
more than one type of these vehicles; 30
(c) A "miscellaneous vehicle dealer" is a vehicle dealer that 31
deals in motorcycles or vehicles other than motor vehicles or mobile 32
homes and travel trailers or any combination of such vehicles;33
(d) A "recreational vehicle dealer" is a vehicle dealer that 34
deals in travel trailers, motor homes, truck campers, or camping 35
trailers that are primarily designed and used as temporary living 36
quarters, are either self-propelled or mounted on or drawn by another 37
vehicle, are transient, are not occupied as a primary residence, and 38
are not immobilized or permanently affixed to a mobile home lot.39
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(18) "Vehicle dealer" does not include, nor do the licensing 1
requirements of RCW 46.70.021 apply to, the following persons, firms, 2
associations, or corporations: 3
(a) Receivers, trustees, administrators, executors, guardians, or 4
other persons appointed by, or acting under a judgment or order of, 5
any court; or 6
(b) Public officers while performing their official duties; or7
(c) Employees of vehicle dealers who are engaged in the specific 8
performance of their duties as such employees; or 9
(d) Any person engaged in an isolated sale of a vehicle in which 10
that person is the registered or legal owner, or both, thereof; or11
(e) Any person, firm, association, corporation, or trust, engaged 12
in the selling of equipment other than vehicles, subject to 13
registration, used for agricultural or industrial purposes; or14
(f) A real estate broker licensed under chapter 18.85 RCW, or an 15
affiliated licensee, who, on behalf of another negotiates the 16
purchase, sale, lease, or exchange of a manufactured or mobile home 17
in conjunction with the purchase, sale, exchange, rental, or lease of 18
the land upon which the manufactured or mobile home is, or will be, 19
located; or 20
(g) Owners who are also operators of special highway construction 21
equipment, as defined in RCW 46.04.551, or of the highway 22
construction equipment for which a vehicle license and display 23
vehicle license number plate is required; or 24
(h) Any bank, trust company, savings bank, mutual savings bank, 25
savings and loan association, credit union, and any parent, 26
subsidiary, or affiliate thereof, authorized to do business in this 27
state under state or federal law with respect to the sale or other 28
disposition of a motor vehicle owned and used in their business; or 29
with respect to the acquisition and sale or other disposition of a 30
motor vehicle in which the entity has acquired an interest as a 31
lessor, lessee, or secured party; or 32
(i) Any person who is regularly engaged in the business of 33
acquiring leases or installment contracts by assignment, with respect 34
to the acquisition and sale or other disposition of a motor vehicle 35
in which the person has acquired an interest as a result of the 36
business. 37
(19) "Vehicle salesperson" means any person who for any form of 38
compensation sells, auctions, leases with an option to purchase, or 39
offers to sell or to so lease vehicles on behalf of a vehicle dealer.40
p. 7 HB 1721
(20) "Wholesale vehicle dealer" means a vehicle dealer who buys 1
vehicles from or sells vehicles to other Washington licensed vehicle 2
dealers. 3
(21) "Zero emissions vehicle" means a vehicle that emits no 4
exhaust gas from the onboard source of power, other than water vapor.5
Sec. 9. RCW 46.70.180 and 2022 c 182 s 211 are each amended to 6
read as follows: 7
Each of the following acts or practices is unlawful:8
(1) To cause or permit to be advertised, printed, displayed, 9
published, distributed, broadcasted, televised, or disseminated in 10
any manner whatsoever, any statement or representation with regard to 11
the sale, lease, or financing of a vehicle which is false, deceptive, 12
or misleading((,)) including, but not limited to, the following:13
(a) That no down payment is required in connection with the sale 14
of a vehicle when a down payment is in fact required, or that a 15
vehicle may be purchased for a smaller down payment than is actually 16
required; 17
(b) That a certain percentage of the sale price of a vehicle may 18
be financed when such financing is not offered in a single document 19
evidencing the entire security transaction; 20
(c) That a certain percentage is the amount of the service charge 21
to be charged for financing, without stating whether this percentage 22
charge is a monthly amount or an amount to be charged per year;23
(d) That a new vehicle will be sold for a certain amount above or 24
below cost without computing cost as the exact amount of the factory 25
invoice on the specific vehicle to be sold; 26
(e) That a vehicle will be sold upon a monthly payment of a 27
certain amount, without including in the statement the number of 28
payments of that same amount which are required to liquidate the 29
unpaid purchase price. 30
(2)(a)(i) To incorporate within the terms of any purchase and 31
sale or lease agreement any statement or representation with regard 32
to the sale, lease, or financing of a vehicle which is false, 33
deceptive, or misleading, including but not limited to terms that 34
include as an added cost to the selling price or capitalized cost of 35
a vehicle an amount for licensing or transfer of title of that 36
vehicle which is not actually due to the state, unless such amount 37
has in fact been paid by the dealer prior to such sale.38
(ii) However((, an)):39
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(A) An amount not to exceed $200 per vehicle sale or lease may be 1
charged by a dealer to recover administrative costs for collecting 2
motor vehicle excise taxes, licensing and registration fees and other 3
agency fees, verifying and clearing titles, transferring titles, 4
perfecting, releasing, or satisfying liens or other security 5
interests, and other administrative and documentary services rendered 6
by a dealer in connection with the sale or lease of a vehicle and in 7
carrying out the requirements of this chapter or any other provisions 8
of state law;9
(B) An amount not to exceed $250 per zero emissions vehicle sale 10
or lease, or $275 per zero emissions vehicle sale or lease if the 11
dealer satisfies zero emissions vehicle program standards or rules 12
adopted by the department of ecology, may be charged by a dealer to 13
recover administrative costs for collecting motor vehicle excise 14
taxes; licensing and registration fees and other agency fees; 15
verifying and clearing titles; transferring titles; perfecting, 16
releasing, or satisfying liens or other security interests; and other 17
administrative and documentary services rendered by a dealer in 18
connection with the sale or lease of a vehicle and in carrying out 19
the requirements of this chapter or any other provision of state law.20
(b) A dealer may charge the documentary service fee in (a) of 21
this subsection under the following conditions: 22
(i) The documentary service fee is disclosed in writing to a 23
prospective purchaser or lessee before the execution of a purchase 24
and sale or lease agreement; 25
(ii) The dealer discloses to the purchaser or lessee in writing 26
that the documentary service fee is a negotiable fee. The disclosure 27
must be written in a typeface that is at least as large as the 28
typeface used in the standard text of the document that contains the 29
disclosure and that is boldfaced, capitalized, underlined, or 30
otherwise set out from the surrounding material so as to be 31
conspicuous. The dealer shall not represent to the purchaser or 32
lessee that the fee or charge is required by the state to be paid by 33
either the dealer or prospective purchaser or lessee;34
(iii) The documentary service fee is separately designated from 35
the selling price or capitalized cost of the vehicle and from any 36
other taxes, fees, or charges; and 37
(iv) Dealers disclose in any advertisement that a documentary 38
service fee in an amount up to $200 may be added to the sale price or 39
the capitalized cost. 40
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For the purposes of this subsection (2), the term "documentary 1
service fee" means the optional amount charged by a dealer to provide 2
the services specified in (a) of this subsection. 3
(3) To set up, promote, or aid in the promotion of a plan by 4
which vehicles are to be sold or leased to a person for a 5
consideration and upon further consideration that the purchaser or 6
lessee agrees to secure one or more persons to participate in the 7
plan by respectively making a similar purchase and in turn agreeing 8
to secure one or more persons likewise to join in said plan, each 9
purchaser or lessee being given the right to secure money, credits, 10
goods, or something of value, depending upon the number of persons 11
joining the plan. 12
(4) To commit, allow, or ratify any act of "bushing" which is 13
defined as follows: Entering into a written contract, written 14
purchase order or agreement, retail installment sales agreement, note 15
and security agreement, or written lease agreement, hereinafter 16
collectively referred to as contract or lease, signed by the 17
prospective buyer or lessee of a vehicle, which: 18
(a) Is subject to any conditions or the dealer's or his or her 19
authorized representative's future acceptance, and the dealer fails 20
or refuses within the "bushing" period, which is four calendar days, 21
exclusive of Saturday, Sunday, or legal holiday, and prior to any 22
further negotiations with said buyer or lessee to inform the buyer or 23
lessee either: (i) That the dealer unconditionally accepts the 24
contract or lease, having satisfied, removed, or waived all 25
conditions to acceptance or performance, including, but not limited 26
to, financing, assignment, or lease approval; or (ii) that the dealer 27
rejects the contract or lease, thereby automatically voiding the 28
contract or lease, as long as such voiding does not negate 29
commercially reasonable contract or lease provisions pertaining to 30
the return of the subject vehicle and any physical damage, excessive 31
mileage after the demand for return of the vehicle, and attorneys' 32
fees authorized by law, and tenders the refund of any initial payment 33
or security made or given by the buyer or lessee, including, but not 34
limited to, any down payment, and tenders return of the trade-in 35
vehicle, key, other trade-in, or certificate of title to a trade-in. 36
Tender may be conditioned on return of the subject vehicle if 37
previously delivered to the buyer or lessee. 38
The provisions of this subsection (4)(a) do not impair, 39
prejudice, or abrogate the rights of a dealer to assert a claim 40
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against the buyer or lessee for misrepresentation or breach of 1
contract and to exercise all remedies available at law or in equity, 2
including those under chapter 62A.9A RCW, if the dealer, bank, or 3
other lender or leasing company discovers that approval of the 4
contract or financing or approval of the lease was based upon 5
material misrepresentations made by the buyer or lessee, including, 6
but not limited to, misrepresentations regarding income, employment, 7
or debt of the buyer or lessee, as long as the dealer, or his or her 8
staff, has not, with knowledge of the material misrepresentation, 9
aided, assisted, encouraged, or participated, directly or indirectly, 10
in the misrepresentation. A dealer shall not be in violation of this 11
subsection (4)(a) if the buyer or lessee made a material 12
misrepresentation to the dealer, as long as the dealer, or his or her 13
staff, has not, with knowledge of the material misrepresentation, 14
aided, assisted, encouraged, or participated, directly or indirectly, 15
in the misrepresentation. 16
A dealer may inform a buyer or lessee under this subsection 17
(4)(a) regarding the unconditional acceptance or rejection of the 18
contract, lease, or financing by sending an email message to the 19
buyer's or lessee's supplied email address, by phone call, by leaving 20
a voice message or sending a text message to a phone number provided 21
by the buyer or lessee, by in-person oral communication, by mailing a 22
letter by first-class mail if the buyer or lessee expresses a 23
preference for a letter or declines to provide an email address and a 24
phone number capable of receiving a free text message, or by another 25
means agreed to by the buyer or lessee or approved by the department, 26
effective upon the execution, mailing, or sending of the 27
communication and before expiration of the "bushing" period;28
(b) Permits the dealer to renegotiate a dollar amount specified 29
as trade-in allowance on a vehicle delivered or to be delivered by 30
the buyer or lessee as part of the purchase price or lease, for any 31
reason except: 32
(i) Failure to disclose that the vehicle's certificate of title 33
has been branded for any reason, including, but not limited to, 34
status as a rebuilt vehicle as provided in RCW 46.12.540 and 35
46.12.560; or 36
(ii) Substantial physical damage or latent mechanical defect 37
occurring before the dealer took possession of the vehicle and which 38
could not have been reasonably discoverable at the time of the taking 39
of the order, offer, or contract; or 40
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(iii) Excessive additional miles or a discrepancy in the mileage. 1
"Excessive additional miles" means the addition of 500 miles or more, 2
as reflected on the vehicle's odometer, between the time the vehicle 3
was first valued by the dealer for purposes of determining its trade-4
in value and the time of actual delivery of the vehicle to the 5
dealer. "A discrepancy in the mileage" means (A) a discrepancy 6
between the mileage reflected on the vehicle's odometer and the 7
stated mileage on the signed odometer statement; or (B) a discrepancy 8
between the mileage stated on the signed odometer statement and the 9
actual mileage on the vehicle; or 10
(c) Fails to comply with the obligation of any written warranty 11
or guarantee given by the dealer requiring the furnishing of services 12
or repairs within a reasonable time. 13
(5) To commit any offense relating to odometers, as such offenses 14
are defined in RCW 46.37.540, 46.37.550, 46.37.560, and 46.37.570. A 15
violation of this subsection is a class C felony punishable under 16
chapter 9A.20 RCW. 17
(6) For any vehicle dealer or vehicle salesperson to refuse to 18
furnish, upon request of a prospective purchaser or lessee, for 19
vehicles previously registered to a business or governmental entity, 20
the name and address of the business or governmental entity.21
(7) To commit any other offense under RCW 46.37.423, 46.37.424, 22
or 46.37.425. 23
(8) To commit any offense relating to a dealer's temporary 24
license permit, including but not limited to failure to properly 25
complete each such permit, or the issuance of more than one such 26
permit on any one vehicle. However, a dealer may issue a second 27
temporary permit on a vehicle if the following conditions are met:28
(a) The lienholder fails to deliver the vehicle title to the 29
dealer within the required time period; 30
(b) The dealer has satisfied the lien; and 31
(c) The dealer has proof that payment of the lien was made within 32
two calendar days, exclusive of Saturday, Sunday, or a legal holiday, 33
after the sales contract has been executed by all parties and all 34
conditions and contingencies in the sales contract have been met or 35
otherwise satisfied. 36
(9) For a dealer, salesperson, or mobile home manufacturer, 37
having taken an instrument or cash "on deposit" from a purchaser or 38
lessee prior to the delivery of the bargained-for vehicle, to 39
commingle the "on deposit" funds with assets of the dealer, 40
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salesperson, or mobile home manufacturer instead of holding the "on 1
deposit" funds as trustee in a separate trust account until the 2
purchaser or lessee has taken delivery of the bargained-for vehicle. 3
Delivery of a manufactured home shall be deemed to occur in 4
accordance with RCW 46.70.135(5). Failure, immediately upon receipt, 5
to endorse "on deposit" instruments to such a trust account, or to 6
set aside "on deposit" cash for deposit in such trust account, and 7
failure to deposit such instruments or cash in such trust account by 8
the close of banking hours on the day following receipt thereof, 9
shall be evidence of intent to commit this unlawful practice: 10
PROVIDED, HOWEVER, That a motor vehicle dealer may keep a separate 11
trust account which equals his or her customary total customer 12
deposits for vehicles for future delivery. For purposes of this 13
section, "on deposit" funds received from a purchaser of a 14
manufactured home means those funds that a seller requires a 15
purchaser to advance before ordering the manufactured home, but does 16
not include any loan proceeds or moneys that might have been paid on 17
an installment contract. 18
(10) For a dealer or manufacturer to fail to comply with the 19
obligations of any written warranty or guarantee given by the dealer 20
or manufacturer requiring the furnishing of goods and services or 21
repairs within a reasonable period of time, or to fail to furnish to 22
a purchaser or lessee, all parts which attach to the manufactured 23
unit including but not limited to the undercarriage, and all items 24
specified in the terms of a sales or lease agreement signed by the 25
seller and buyer or lessee. 26
(11) For a vehicle dealer to pay to or receive from any person, 27
firm, partnership, association, or corporation acting, either 28
directly or through a subsidiary, as a buyer's agent for consumers, 29
any compensation, fee, purchase moneys or funds that have been 30
deposited into or withdrawn out of any account controlled or used by 31
any buyer's agent, gratuity, or reward in connection with the 32
purchase, sale, or lease of a new motor vehicle. 33
(12) For a buyer's agent, acting directly or through a 34
subsidiary, to pay to or to receive from any motor vehicle dealer any 35
compensation, fee, gratuity, or reward in connection with the 36
purchase, sale, or lease of a new motor vehicle. In addition, it is 37
unlawful for any buyer's agent to engage in any of the following acts 38
on behalf of or in the name of the consumer: 39
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(a) Receiving or paying any purchase moneys or funds into or out 1
of any account controlled or used by any buyer's agent;2
(b) Signing any vehicle purchase orders, sales contracts, leases, 3
odometer statements, or title documents, or having the name of the 4
buyer's agent appear on the vehicle purchase order, sales contract, 5
lease, or title; or 6
(c) Signing any other documentation relating to the purchase, 7
sale, lease, or transfer of any new motor vehicle. 8
It is unlawful for a buyer's agent to use a power of attorney 9
obtained from the consumer to accomplish or effect the purchase, 10
sale, lease, or transfer of ownership documents of any new motor 11
vehicle by any means which would otherwise be prohibited under (a) 12
through (c) of this subsection. However, the buyer's agent may use a 13
power of attorney for physical delivery of motor vehicle license 14
plates to the consumer. 15
Further, it is unlawful for a buyer's agent to engage in any 16
false, deceptive, or misleading advertising, disseminated in any 17
manner whatsoever, including but not limited to making any claim or 18
statement that the buyer's agent offers, obtains, or guarantees the 19
lowest price on any motor vehicle or words to similar effect.20
(13) For a buyer's agent to arrange for or to negotiate the 21
purchase, or both, of a new motor vehicle through an out-of-state 22
dealer without disclosing in writing to the customer that the new 23
vehicle would not be subject to chapter 19.118 RCW. This subsection 24
also applies to leased vehicles. In addition, it is unlawful for any 25
buyer's agent to fail to have a written agreement with the customer 26
that: (a) Sets forth the terms of the parties' agreement; (b) 27
discloses to the customer the total amount of any fees or other 28
compensation being paid by the customer to the buyer's agent for the 29
agent's services; and (c) further discloses whether the fee or any 30
portion of the fee is refundable. 31
(14) Being a manufacturer, other than a motorcycle manufacturer 32
governed by chapter 46.93 RCW, to: 33
(a) Coerce or attempt to coerce any vehicle dealer to order or 34
accept delivery of any vehicle or vehicles, parts or accessories, or 35
any other commodities which have not been voluntarily ordered by the 36
vehicle dealer: PROVIDED, That recommendation, endorsement, 37
exposition, persuasion, urging, or argument are not deemed to 38
constitute coercion; 39
p. 14 HB 1721
(b) Cancel or fail to renew the franchise or selling agreement of 1
any vehicle dealer doing business in this state without fairly 2
compensating the dealer at a fair going business value for his or her 3
capital investment which shall include but not be limited to tools, 4
equipment, and parts inventory possessed by the dealer on the day he 5
or she is notified of such cancellation or termination and which are 6
still within the dealer's possession on the day the cancellation or 7
termination is effective, if: (i) The capital investment has been 8
entered into with reasonable and prudent business judgment for the 9
purpose of fulfilling the franchise; and (ii) the cancellation or 10
nonrenewal was not done in good faith. Good faith is defined as the 11
duty of each party to any franchise to act in a fair and equitable 12
manner towards each other, so as to guarantee one party freedom from 13
coercion, intimidation, or threats of coercion or intimidation from 14
the other party: PROVIDED, That recommendation, endorsement, 15
exposition, persuasion, urging, or argument are not deemed to 16
constitute a lack of good faith; 17
(c) Encourage, aid, abet, or teach a vehicle dealer to sell or 18
lease vehicles through any false, deceptive, or misleading sales or 19
financing practices including but not limited to those practices 20
declared unlawful in this section; 21
(d) Coerce or attempt to coerce a vehicle dealer to engage in any 22
practice forbidden in this section by either threats of actual 23
cancellation or failure to renew the dealer's franchise agreement;24
(e) Refuse to deliver any vehicle publicly advertised for 25
immediate delivery to any duly licensed vehicle dealer having a 26
franchise or contractual agreement for the retail sale or lease of 27
new and unused vehicles sold or distributed by such manufacturer 28
within ((sixty)) 60 days after such dealer's order has been received 29
in writing unless caused by inability to deliver because of shortage 30
or curtailment of material, labor, transportation, or utility 31
services, or by any labor or production difficulty, or by any cause 32
beyond the reasonable control of the manufacturer;33
(f) ((To provide)) Provide under the terms of any warranty that a 34
purchaser or lessee of any new or unused vehicle that has been sold 35
or leased, distributed for sale or lease, or transferred into this 36
state for resale or lease by the vehicle manufacturer may only make 37
any warranty claim on any item included as an integral part of the 38
vehicle against the manufacturer of that item;39
p. 15 HB 1721
(g) Offer to a consumer a subscription service for any motor 1
vehicle feature that utilizes components and hardware already 2
installed on the motor vehicle at the time of purchase or lease and 3
would function after activation without ongoing cost to or support by 4
the dealer, manufacturer, distributor, or a third-party service 5
provider.6
(i) This subsection does not apply to navigation system updates, 7
satellite radio, roadside assistance, software-dependent driver 8
assistance or driver automation features, and vehicle-connected 9
services that rely on cellular or other data networks for continued 10
operation.11
(ii) As used in this subsection:12
(A) "Motor vehicle feature" means any convenience or safety 13
function included on the motor vehicle, such as heated seats or 14
driver assistance, that typically is offered to a consumer as an 15
upgrade at the time of purchase or lease of the motor vehicle.16
(B) "Subscription service" means a service provided in exchange 17
for a recurring payment including, but not limited to, a weekly, 18
monthly, or annual payment charged to and made by a consumer, but 19
does not include a consumer's reoccurring payment made pursuant to a 20
conditional sales contract or lease contract. 21
Nothing in this section may be construed to impair the 22
obligations of a contract or to prevent a manufacturer, distributor, 23
representative, or any other person, whether or not licensed under 24
this chapter, from requiring performance of a written contract 25
entered into with any licensee hereunder, nor does the requirement of 26
such performance constitute a violation of any of the provisions of 27
this section if any such contract or the terms thereof requiring 28
performance, have been freely entered into and executed between the 29
contracting parties. This paragraph and subsection (14)(b) of this 30
section do not apply to new motor vehicle manufacturers governed by 31
chapter 46.96 RCW. 32
(15) Unlawful transfer of an ownership interest in a motor 33
vehicle as defined in RCW 19.116.050. 34
(16) To knowingly and intentionally engage in collusion with a 35
registered owner of a vehicle to repossess and return or resell the 36
vehicle to the registered owner in an attempt to avoid a suspended 37
license impound under chapter 46.55 RCW. However, compliance with 38
chapter 62A.9A RCW in repossessing, selling, leasing, or otherwise 39
p. 16 HB 1721
disposing of the vehicle, including providing redemption rights to 1
the debtor, is not a violation of this section. 2
(17)(a) For a dealer to enter into a new motor vehicle sales 3
contract without disclosing in writing to a buyer of the new motor 4
vehicle, or to a dealer in the case of an unregistered motor vehicle, 5
any known damage and repair to the new motor vehicle if the damage 6
exceeds five percent of the manufacturer's suggested retail price as 7
calculated at the dealer's authorized warranty rate for labor and 8
parts, or $1,000, whichever amount is greater. A manufacturer or new 9
motor vehicle dealer is not required to disclose to a dealer or buyer 10
that glass, tires, bumpers, or cosmetic parts of a new motor vehicle 11
were damaged at any time if the damaged item has been replaced with 12
original or comparable equipment. A replaced part is not part of the 13
cumulative damage required to be disclosed under this subsection.14
(b) A manufacturer is required to provide the same disclosure to 15
a dealer of any known damage or repair as required in (a) of this 16
subsection. 17
(c) If disclosure of any known damage or repair is not required 18
under this section, a buyer may not revoke or rescind a sales 19
contract due to the fact that the new motor vehicle was damaged and 20
repaired before completion of the sale. 21
(d) As used in this section: 22
(i) "Cosmetic parts" means parts that are attached by and can be 23
replaced in total through the use of screws, bolts, or other 24
fasteners without the use of welding or thermal cutting, and includes 25
windshields, bumpers, hoods, or trim panels. 26
(ii) "Manufacturer's suggested retail price" means the retail 27
price of the new motor vehicle suggested by the manufacturer, and 28
includes the retail delivered price suggested by the manufacturer for 29
each accessory or item of optional equipment physically attached to 30
the new motor vehicle at the time of delivery to the new motor 31
vehicle dealer that is not included within the retail price suggested 32
by the manufacturer for the new motor vehicle. 33
(18) To take reservations, dictate the selling price, or 34
negotiate binding terms of sale or leasing of a new motor vehicle 35
directly between the manufacturer, factory branch, distributor, or 36
distributor branch and retail buyers or lessees including, but not 37
limited to, agreements on price, trade-in value, or other substantive 38
terms of sale or leasing of new vehicles, or otherwise if the new 39
motor vehicle will be delivered for sale or lease in Washington, 40
p. 17 HB 1721
except for those manufacturers licensed under RCW 1
46.96.185(1)(g)(vii). 2
Sec. 10. RCW 46.96.010 and 1989 c 415 s 1 are each amended to 3
read as follows: 4
The legislature finds and declares that the distribution and sale 5
of motor vehicles in this state vitally affect the general economy of 6
the state and the public interest and public welfare, that provision 7
for warranty service to motor vehicles is of substantial concern to 8
the people of this state, that the maintenance of fair competition 9
among dealers and others is in the public interest, and that the 10
maintenance of strong and sound dealerships is essential to provide 11
continuing and necessary reliable services to the consuming public in 12
this state and to provide stable employment to the citizens of this 13
state. The legislature further finds that there is a substantial 14
disparity in bargaining power between automobile manufacturers and 15
their dealers, and that in order to promote the public interest and 16
the public welfare, and in the exercise of its police power, it is 17
necessary to regulate the relationship between motor vehicle dealers 18
and motor vehicle manufacturers, importers, distributors, and their 19
representatives doing business in this state, not only for the 20
protection of dealers but also for the benefit ((for)) of the public 21
in assuring the continued availability and servicing of automobiles 22
sold to the public. 23
The legislature recognizes it is in the best interest for 24
manufacturers and dealers of motor vehicles to conduct business with 25
each other in a fair, efficient, and competitive manner. The 26
legislature declares the public interest is best served by dealers 27
being assured of the ability to manage their business enterprises 28
under a contractual obligation with manufacturers where dealers do 29
not experience unreasonable interference and are assured of the 30
ability to transfer ownership of their business without undue 31
constraints. It is the intent of the legislature to impose a 32
regulatory scheme and to regulate competition in the motor vehicle 33
industry to the extent necessary to balance fairness and efficiency. 34
These actions will permit motor vehicle dealers to better serve 35
consumers ((and allow dealers to )), devote their best competitive 36
efforts and resources to the sale and ((services)) service of the 37
manufacturer's products to consumers , and provide fair compensation 38
for work performed in all departments of the business.39
p. 18 HB 1721
Sec. 11. RCW 46.96.105 and 2014 c 214 s 6 are each amended to 1
read as follows: 2
(1) Each manufacturer shall specify in its franchise agreement, 3
or in a separate written agreement, with each of its dealers licensed 4
in this state, the dealer's obligation to perform warranty work or 5
service on the manufacturer's products. Each manufacturer shall 6
provide each of its dealers with a schedule of compensation to be 7
paid to the dealer for any warranty work or service, including parts, 8
labor, and diagnostic work, required of the dealer by the 9
manufacturer in connection with the manufacturer's products. The 10
schedule of compensation must not be less than the rates charged by 11
the dealer for similar service to retail customers for nonwarranty 12
service and repairs, and must not be less than the schedule of 13
compensation for an existing dealer as of June 10, 2010.14
(a) The rates charged by the dealer for nonwarranty service or 15
work for parts means the price paid by the dealer for those parts, 16
including all shipping and other charges, increased by the 17
franchisee's average percentage markup. If a manufacturer or 18
distributor furnishes or arranges the order or distribution of a part 19
or component to a new motor vehicle dealer at no or reduced cost to 20
use in performing repairs, the manufacturer or distributor shall 21
compensate the dealer for the part or component in the same manner as 22
warranty parts compensation under this section by compensating the 23
dealer the retail parts rate on the wholesale cost for the part or 24
component as listed in the manufacturer's or distributor's price 25
schedule, minus the wholesale cost for the part or component. A 26
manufacturer shall not establish or implement a special part or 27
component number for parts used in predelivery, dealer preparation, 28
warranty, service contract, certified preowned warranty, recall, 29
campaign service, authorized goodwill, or maintenance-only 30
applications if it results in lower compensation to the dealer than 31
as calculated in this section. A dealer must establish and declare 32
the dealer's average percentage markup by submitting to the 33
manufacturer ((one hundred )) 100 sequential customer-paid service 34
repair orders or ninety days of customer-paid service repair orders, 35
whichever is less, covering repairs made no more than ((one hundred 36
eighty)) 180 days before the submission. A change in a dealer's 37
established average percentage markup takes effect ((thirty)) 30 days 38
following the submission. A manufacturer may not require a dealer to 39
establish average percentage markup by another methodology. A 40
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manufacturer may not require information that the dealer believes is 1
unduly burdensome or time-consuming to provide, including, but not 2
limited to, part-by-part or transaction-by-transaction calculations. 3
In calculating the retail rate customarily charged by the dealer for 4
parts and labor, the following work must not be included in the 5
calculation: 6
(i) Repairs for manufacturer or distributor special events, 7
specials, or promotional discounts for retail customer repairs;8
(ii) Parts sold at wholesale or at reduced or specially 9
negotiated rates for insurance repairs; 10
(iii) Routine maintenance not covered under warranty, such as 11
fluids, filters, and belts not provided in the course of repairs;12
(iv) Nuts, bolts, fasteners, and similar items that do not have 13
an individual part number; 14
(v) Tires; 15
(vi) Batteries and light bulbs; and 16
(vii) Vehicle reconditioning. 17
(b) A manufacturer shall compensate a dealer for labor and 18
diagnostic work at ((the rates charged by the dealer to its retail 19
customers for such work )) a rate determined by dividing the total 20
customer labor charges for qualifying nonwarranty repairs in the 21
repair orders submitted under this section by the total number of 22
hours that would be allowed for the repairs if the repairs were made 23
under the manufacturer's, importer's, or distributor's time 24
allowances used in compensating the dealer for warranty work and for 25
any documentation work required by the manufacturer to authorize or 26
verify the work including, but not limited to, photographs, 27
paperwork, and electronic data entry. However, a manufacturer is not 28
required to compensate a dealer more than once for the same 29
documentation work. If a manufacturer can demonstrate that the rates 30
unreasonably exceed those of all other franchised motor vehicle 31
dealers in the same relevant market area offering the same or a 32
competitive motor vehicle line, the manufacturer is not required to 33
honor the rate increase proposed by the dealer. If the manufacturer 34
is not required to honor the rate increase proposed by the dealer, 35
the dealer is entitled to resubmit a new proposed rate for labor and 36
diagnostic work. 37
(c) A dealer may not be granted an increase in the average 38
percentage markup or labor and diagnostic work rate more than once in 39
one calendar year. 40
p. 20 HB 1721
(2) All claims for warranty work for parts and labor made by 1
dealers under this section must be submitted to the manufacturer 2
within ((ninety)) 90 days of the date the work was performed. All 3
claims submitted must be paid by the manufacturer within ((thirty)) 4
30 days following receipt, provided the claim has been approved by 5
the manufacturer. The manufacturer has the right to audit claims for 6
warranty work and to charge the dealer for any unsubstantiated, 7
incorrect, or false claims for a period of nine months following 8
payment. However, the manufacturer may audit and charge the dealer 9
for any fraudulent claims during any period for which an action for 10
fraud may be commenced under applicable state law.11
(3) All claims submitted by dealers on the forms and in the 12
manner specified by the manufacturer shall be either approved or 13
disapproved within ((thirty)) 30 days following their receipt. The 14
manufacturer shall notify the dealer in writing of any disapproved 15
claim, and shall set forth the reasons why the claim was not 16
approved. Any claim not specifically disapproved in writing within 17
((thirty)) 30 days following receipt is approved, and the 18
manufacturer is required to pay that claim within ((thirty)) 30 days 19
of receipt of the claim. 20
(4) A manufacturer may not otherwise recover all or any portion 21
of its costs for compensating its dealers licensed in this state for 22
warranty parts and service either by reduction in the amount due to 23
the dealer or by separate charge, surcharge, or other imposition.24
Sec. 12. RCW 46.96.140 and 1994 c 274 s 1 are each amended to 25
read as follows: 26
(1) For the purposes of this section, and throughout this 27
chapter, the term "relevant market area" is defined as follows:28
(a) If the population in the county in which the proposed new or 29
relocated dealership is to be located is ((four hundred thousand )) 30
400,000 or more, the relevant market area is the geographic area 31
within a radius of ((eight)) 10 miles around the proposed site;32
(b) If the population in the county in which the proposed new or 33
relocated dealership is to be located is ((two hundred thousand )) 34
200,000 or more and less than ((four hundred thousand )) 400,000, the 35
relevant market area is the geographic area within a radius of 36
((twelve)) 12 miles around the proposed site; 37
(c) If the population in the county in which the proposed new or 38
relocated dealership is to be located is less than ((two hundred 39
p. 21 HB 1721
thousand)) 200,000, the relevant market area is the geographic area 1
within a radius of ((sixteen)) 16 miles around the proposed site.2
In determining population for this definition, the most recent 3
census by the United States Bureau of Census or the most recent 4
population update, either from the National Planning Data Corporation 5
or other similar recognized source, shall be accumulated for all 6
census tracts either wholly or partially within the relevant market 7
area. 8
(2) For the purpose of RCW 46.96.140 through 46.96.180, the term 9
"motor vehicle dealer" does not include dealerships who exclusively 10
market vehicles 19,000 pounds gross vehicle weight and above.11
(3) Notwithstanding the terms of a franchise and notwithstanding 12
the terms of a waiver, if a manufacturer intends or proposes to enter 13
into a franchise to establish an additional new motor vehicle dealer 14
or to relocate an existing new motor vehicle dealer within or into a 15
relevant market area in which the same line make of motor vehicle is 16
then represented, the manufacturer shall provide at least ((sixty)) 17
60 days advance written notice to the department and to each new 18
motor vehicle dealer of the same line make in the relevant market 19
area, of the manufacturer's intention to establish an additional new 20
motor vehicle dealer or to relocate an existing new motor vehicle 21
dealer within or into the relevant market area. The notice shall be 22
sent by certified mail to each such party and shall include the 23
following information: 24
(a) The specific location at which the additional or relocated 25
motor vehicle dealer will be established; 26
(b) The date on or after which the additional or relocated motor 27
vehicle dealer intends to commence business at the proposed location;28
(c) The identity of all motor vehicle dealers who are franchised 29
to sell the same line make vehicles as the proposed dealer and who 30
have licensed locations within the relevant market area;31
(d) The names and addresses, if available, of the owners of and 32
principal investors in the proposed additional or relocated motor 33
vehicle dealership; and 34
(e) The specific grounds or reasons for the proposed 35
establishment of an additional motor vehicle dealer or relocation of 36
an existing dealer. 37
Sec. 13. RCW 46.96.185 and 2018 c 296 s 2 are each amended to 38
read as follows: 39
p. 22 HB 1721
(1) Notwithstanding the terms of a franchise agreement, a 1
manufacturer, distributor, factory branch, or factory representative, 2
or an agent, officer, parent company, wholly or partially owned 3
subsidiary, affiliated entity, or other person controlled by or under 4
common control with a manufacturer, distributor, factory branch, or 5
factory representative, shall not: 6
(a) Discriminate between new motor vehicle dealers by selling or 7
offering to sell a like vehicle to one dealer at a lower actual price 8
than the actual price offered to another dealer for the same model 9
similarly equipped; 10
(b) Discriminate between new motor vehicle dealers by selling or 11
offering to sell parts or accessories to one dealer at a lower actual 12
price than the actual price offered to another dealer;13
(c) Discriminate between new motor vehicle dealers by using a 14
promotion plan, marketing plan, or other similar device that results 15
in a lower actual price on vehicles, parts, or accessories being 16
charged to one dealer over another dealer; 17
(d) Discriminate between new motor vehicle dealers by adopting a 18
method, or changing an existing method, for the allocation, 19
scheduling, or delivery of new motor vehicles, parts, or accessories 20
to its dealers that is not fair, reasonable, and equitable. Upon the 21
request of a dealer, a manufacturer, distributor, factory branch, or 22
factory representative shall disclose in writing to the dealer the 23
method by which new motor vehicles, parts, and accessories are 24
allocated, scheduled, or delivered to its dealers handling the same 25
line or make of vehicles; 26
(e) Discriminate against a new motor vehicle dealer by 27
preventing, offsetting, or otherwise impairing the dealer's right to 28
request a documentary service fee on affinity or similar program 29
purchases. This prohibition applies to, but is not limited to, any 30
promotion plan, marketing plan, manufacturer or dealer employee or 31
employee friends or family purchase programs, or similar plans or 32
programs; 33
(f) Give preferential treatment to some new motor vehicle dealers 34
over others by refusing or failing to deliver, in reasonable 35
quantities and within a reasonable time after receipt of an order, to 36
a dealer holding a franchise for a line or make of motor vehicles 37
sold or distributed by the manufacturer, distributor, factory branch, 38
or factory representative, a new vehicle, parts, or accessories, if 39
the vehicle, parts, or accessories are being delivered to other 40
p. 23 HB 1721
dealers, or require a dealer to purchase unreasonable advertising 1
displays or other materials, or unreasonably require a dealer to 2
remodel or renovate existing facilities as a prerequisite to 3
receiving a model or series of vehicles; 4
(g) Compete with a new motor vehicle dealer of any make or line 5
by acting in the capacity of a new motor vehicle dealer, or by 6
owning, operating, or controlling, whether directly or indirectly, a 7
motor vehicle dealership in this state. It is not, however, a 8
violation of this subsection for: 9
(i) A manufacturer, distributor, factory branch, or factory 10
representative to own or operate a dealership for a temporary period, 11
not to exceed two years, during the transition from one owner of the 12
dealership to another where the dealership was previously owned by a 13
franchised dealer and is currently for sale to any qualified 14
independent person at a fair and reasonable price. The temporary 15
operation may be extended for one ((twelve-month)) 12-month period on 16
petition of the temporary operator to the department. The matter will 17
be handled as an adjudicative proceeding under chapter 34.05 RCW. A 18
dealer who is a franchisee of the petitioning manufacturer or 19
distributor may intervene and participate in a proceeding under this 20
subsection (1)(g)(i). The temporary operator has the burden of proof 21
to show justification for the extension and a good faith effort to 22
sell the dealership to an independent person at a fair and reasonable 23
price; 24
(ii) A manufacturer, distributor, factory branch, or factory 25
representative to own or operate a dealership in conjunction with an 26
independent person in a bona fide business relationship for the 27
purpose of broadening the diversity of its dealer body and enhancing 28
opportunities for qualified persons who are part of a group who have 29
historically been underrepresented in its dealer body or who 30
represent overburdened communities as defined in RCW 70A.02.010, or 31
other qualified persons who lack the resources to purchase a 32
dealership outright, and where the independent person: (A) Has made, 33
or within a period of two years from the date of commencement of 34
operation will have made, a significant, bona fide capital investment 35
in the dealership that is subject to loss; (B) has an ownership 36
interest in the dealership; and (C) operates the dealership under a 37
bona fide written agreement with the manufacturer, distributor, 38
factory branch, or factory representative under which he or she will 39
acquire all of the ownership interest in the dealership within a 40
p. 24 HB 1721
reasonable period of time and under reasonable terms and conditions. 1
The manufacturer, distributor, factory branch, or factory 2
representative has the burden of proof of establishing that the 3
acquisition of the dealership by the independent person was made 4
within a reasonable period of time and under reasonable terms and 5
conditions. Nothing in this subsection (1)(g)(ii) relieves a 6
manufacturer, distributor, factory branch, or factory representative 7
from complying with (a) through (f) of this subsection;8
(iii) A manufacturer, distributor, factory branch, or factory 9
representative to own or operate a dealership in conjunction with an 10
independent person in a bona fide business relationship where the 11
independent person: (A) Has made, or within a period of two years 12
from the date of commencement of operation will have made, a 13
significant, bona fide capital investment in the dealership that is 14
subject to loss; (B) has an ownership interest in the dealership; and 15
(C) operates the dealership under a bona fide written agreement with 16
the manufacturer, distributor, factory branch, or factory 17
representative under which he or she will acquire all of the 18
ownership interest in the dealership within a reasonable period of 19
time and under reasonable terms and conditions. The manufacturer, 20
distributor, factory branch, or factory representative has the burden 21
of proof of establishing that the acquisition of the dealership by 22
the independent person was made within a reasonable period of time 23
and under reasonable terms and conditions. The number of dealerships 24
operated under this subsection (1)(g)(iii) may not exceed four 25
percent rounded up to the nearest whole number of a manufacturer's 26
total of new motor vehicle dealer franchises in this state. Nothing 27
in this subsection (1)(g)(iii) relieves a manufacturer, distributor, 28
factory branch, or factory representative from complying with (a) 29
through (f) of this subsection; 30
(iv) A truck manufacturer to own, operate, or control a new motor 31
vehicle dealership that sells only trucks of that manufacturer's line 32
make with a gross vehicle weight rating of 12,500 pounds or more, and 33
the truck manufacturer has been continuously engaged in the retail 34
sale of the trucks at least since January 1, 1993;35
(v) A manufacturer to own, operate, or control a new motor 36
vehicle dealership trading exclusively in a single line make of the 37
manufacturer if (A) the manufacturer does not own, directly or 38
indirectly, in the aggregate, in excess of ((forty-five)) 45 percent 39
of the total ownership interest in the dealership, (B) at the time 40
p. 25 HB 1721
the manufacturer first acquires ownership or assumes operation or 1
control of any such dealership, the distance between any dealership 2
thus owned, operated, or controlled and the nearest new motor vehicle 3
dealership trading in the same line make of vehicle and in which the 4
manufacturer has no ownership or control is not less than ((fifteen)) 5
15 miles and complies with the applicable provisions in the relevant 6
market area sections of this chapter, (C) all of the manufacturer's 7
franchise agreements confer rights on the dealer of that line make to 8
develop and operate within a defined geographic territory or area, as 9
many dealership facilities as the dealer and the manufacturer agree 10
are appropriate, and (D) as of January 1, 2000, the manufacturer had 11
no more than four new motor vehicle dealers of that manufacturer's 12
line make in this state, and at least half of those dealers owned and 13
operated two or more dealership facilities in the geographic 14
territory or area covered by their franchise agreements with the 15
manufacturer; 16
(vi) A final-stage manufacturer to own, operate, or control a new 17
motor vehicle dealership; or 18
(vii) A manufacturer that ((held a vehicle dealer license in this 19
state on January 1, 2014 )) has not previously offered a franchise to 20
a dealer in the state and produces only zero emissions vehicles, as 21
defined in RCW 46.70.011, to own, operate, or control a new motor 22
vehicle dealership that sells new vehicles that are only of that 23
manufacturer's makes or lines ((and that are not sold new by a 24
licensed independent franchise dealer, )) or to own, operate, or 25
control or contract with companies that provide finance, leasing, or 26
service for vehicles that are of that manufacturer's makes or lines , 27
or provide service for vehicles that are of that manufacturer's makes 28
or lines. This subsection (1)(g)(vii) does not apply if a common 29
entity of the manufacturer, through any importers, distributors, 30
licensees, or affiliates, has ever entered into a franchise agreement 31
with an independent dealer for the sale of new motor vehicles. For 32
purposes of this subsection, "common entity" means a person:33
(A) Who is directly or indirectly controlled by or has more than 34
30 percent of its equity interest directly or indirectly owned, 35
beneficially or of record, through any form of ownership structure, 36
by a manufacturer, importer, distributor, or licensee, or an 37
affiliate thereof; or38
(B) Who has more than 30 percent of its equity interest directly 39
or indirectly controlled or owned, beneficially or of record, through 40
p. 26 HB 1721
any form of ownership structure, by one or more persons who also 1
directly or indirectly control or own, beneficially or of record, 2
more than 30 percent of the equity interests of a manufacturer or 3
importer, or any affiliate thereof; 4
(h) Compete with a new motor vehicle dealer by owning, operating, 5
or controlling, whether directly or indirectly, a service facility in 6
this state for the repair or maintenance of motor vehicles under the 7
manufacturer's new car warranty and extended warranty. Nothing in 8
this subsection (1)(h), however, prohibits a manufacturer, 9
distributor, factory branch, or factory representative from owning or 10
operating a service facility for the purpose of providing or 11
performing maintenance, repair, or service work on motor vehicles 12
that are owned by the manufacturer, distributor, factory branch, or 13
factory representative; 14
(i) Use confidential or proprietary information obtained from a 15
new motor vehicle dealer to unfairly compete with the dealer. For 16
purposes of this subsection (1)(i), "confidential or proprietary 17
information" means trade secrets as defined in RCW 19.108.010, 18
business plans, marketing plans or strategies, customer lists, 19
contracts, sales data, revenues, or other financial information;20
(j)(i) Terminate, cancel, or fail to renew a franchise with a new 21
motor vehicle dealer based upon any of the following events, which do 22
not constitute good cause for termination, cancellation, or 23
nonrenewal under RCW 46.96.060: (A) The fact that the new motor 24
vehicle dealer owns, has an investment in, participates in the 25
management of, or holds a franchise agreement for the sale or service 26
of another make or line of new motor vehicles; (B) the fact that the 27
new motor vehicle dealer has established another make or line of new 28
motor vehicles or service in the same dealership facilities as those 29
of the manufacturer or distributor; (C) that the new motor vehicle 30
dealer has or intends to relocate the manufacturer or distributor's 31
make or line of new motor vehicles or service to an existing 32
dealership facility that is within the relevant market area, as 33
defined in RCW 46.96.140, of the make or line to be relocated, except 34
that, in any nonemergency circumstance, the dealer must give the 35
manufacturer or distributor at least ((sixty)) 60 days' notice of his 36
or her intent to relocate and the relocation must comply with RCW 37
46.96.140 and 46.96.150 for any same make or line facility; or (D) 38
the failure of a franchisee to change the location of the dealership 39
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or to make substantial alterations to the use or number of franchises 1
on the dealership premises or facilities. 2
(ii) Notwithstanding the limitations of this section, a 3
manufacturer may, for separate consideration, enter into a written 4
contract with a dealer to exclusively sell and service a single make 5
or line of new motor vehicles at a specific facility for a defined 6
period of time. The penalty for breach of the contract must not 7
exceed the amount of consideration paid by the manufacturer plus a 8
reasonable rate of interest; 9
(k) Coerce or attempt to coerce a motor vehicle dealer to refrain 10
from, or prohibit or attempt to prohibit a new motor vehicle dealer 11
from acquiring, owning, having an investment in, participating in the 12
management of, or holding a franchise agreement for the sale or 13
service of another make or line of new motor vehicles or related 14
products, or establishing another make or line of new motor vehicles 15
or service in the same dealership facilities, if the prohibition 16
against acquiring, owning, investing, managing, or holding a 17
franchise for such additional make or line of vehicles or products, 18
or establishing another make or line of new motor vehicles or service 19
in the same dealership facilities, is not supported by reasonable 20
business considerations. The burden of proving that reasonable 21
business considerations support or justify the prohibition against 22
the additional make or line of new motor vehicles or products or 23
nonexclusive facilities is on the manufacturer; 24
(l) Require, by contract or otherwise, a new motor vehicle dealer 25
to make a material alteration, expansion, or addition to any 26
dealership facility, unless the required alteration, expansion, or 27
addition is uniformly required of other similarly situated new motor 28
vehicle dealers of the same make or line of vehicles and is 29
reasonable in light of all existing circumstances, including economic 30
conditions. In any proceeding in which a required facility 31
alteration, expansion, or addition is an issue, the manufacturer or 32
distributor has the burden of proof. Except for a program or any 33
renewal or modification of a program that is in effect with one or 34
more new motor vehicle dealers in this state on June 12, 2014, a 35
manufacturer shall not require, coerce, or attempt to coerce any new 36
motor vehicle dealer by program, policy, standard, or otherwise to 37
change the location of the dealership or construct, replace, 38
renovate, or make any substantial changes, alterations, or remodeling 39
to a new motor vehicle dealer's sales or service facilities, except 40
p. 28 HB 1721
as necessary to comply with health or safety laws or to comply with 1
technology requirements without which a dealer would be unable to 2
service a vehicle the dealer has elected to sell, before the 3
((tenth)) 10th anniversary of the date of issuance of the certificate 4
of occupancy or the manufacturer's approval, whichever is later, 5
from: 6
(i) The date construction of the dealership at that location was 7
completed if the construction was in substantial compliance with 8
standards or plans provided by a manufacturer, distributor, or 9
representative or through a subsidiary or agent of the manufacturer, 10
distributor, or representative; or 11
(ii) The date a prior change, alteration, or remodel of the 12
dealership at that location was completed if the construction was in 13
substantial compliance with standards or plans provided by a 14
manufacturer, distributor, or representative or through a subsidiary 15
or agent of the manufacturer, distributor, or representative;16
(m) Prevent or attempt to prevent by contract or otherwise any 17
new motor vehicle dealer from changing the executive management of a 18
new motor vehicle dealer unless the manufacturer or distributor, 19
having the burden of proof, can show that a proposed change of 20
executive management will result in executive management by a person 21
or persons who are not of good moral character or who do not meet 22
reasonable, preexisting, and equitably applied standards of the 23
manufacturer or distributor. If a manufacturer or distributor rejects 24
a proposed change in the executive management, the manufacturer or 25
distributor shall give written notice of its reasons to the dealer 26
within ((sixty)) 60 days after receiving written notice from the 27
dealer of the proposed change and all related information reasonably 28
requested by the manufacturer or distributor, or the change in 29
executive management must be considered approved; 30
(n) Condition the sale, transfer, relocation, or renewal of a 31
franchise agreement or condition manufacturer, distributor, factory 32
branch, or factory representative sales, services, or parts 33
incentives upon the manufacturer obtaining site control, including 34
rights to purchase or lease the dealer's facility, or an agreement to 35
make improvements or substantial renovations to a facility. For 36
purposes of this section, a substantial renovation has a gross cost 37
to the dealer in excess of ((five thousand dollars)) $5,000;38
(o) Fail to provide to a new motor vehicle dealer purchasing or 39
leasing building materials or other facility improvements the right 40
p. 29 HB 1721
to purchase or lease franchisor image elements of like kind and 1
quality from an alternative vendor selected by the dealer if the 2
goods or services are to be supplied by a vendor selected, 3
identified, or designated by the manufacturer or distributor. If the 4
vendor selected by the manufacturer or distributor is the only 5
available vendor of like kind and quality materials, the new motor 6
vehicle dealer must be given the opportunity to purchase the 7
franchisor image elements at a price substantially similar to the 8
capitalized lease costs of the elements. This subsection (1)(o) must 9
not be construed to allow a new motor vehicle dealer or vendor to 10
gain additional intellectual property rights they are not otherwise 11
entitled to or to impair or eliminate the intellectual property 12
rights of the manufacturer or distributor or to permit a new motor 13
vehicle dealer to erect or maintain signs that do not conform to the 14
reasonable intellectual property usage guidelines of the manufacturer 15
or distributor; 16
(p) Take any adverse action against a new motor vehicle dealer 17
including, but not limited to, charge backs or reducing vehicle 18
allocations, for sales and service performance within a designated 19
area of primary responsibility unless that area is reasonable in 20
light of proximity to relevant census tracts to the dealership and 21
competing dealerships, highways and road networks, any natural or 22
man-made barriers, demographics, including economic factors, buyer 23
behavior information, and contains only areas inside the state of 24
Washington unless specifically approved by the new motor vehicle 25
dealer; 26
(q) Require, coerce, or attempt to coerce any new motor vehicle 27
dealer by program, policy, facility guide, standard, or otherwise to 28
order or accept delivery of any service or repair appliances, 29
equipment, parts, or accessories, or any other commodity not required 30
by law, which the dealer has not voluntarily ordered or which the 31
dealer does not have the right to return unused for a full refund 32
within ((ninety)) 90 days or a longer period as mutually agreed upon 33
by the dealer and manufacturer; ((or))34
(r) Modify the franchise agreement for any new motor vehicle 35
dealer unless the manufacturer notifies the dealer in writing of its 36
intention to modify the agreement at least ((ninety)) 90 days before 37
the effective date thereof, stating the specific grounds for the 38
modification, and undertakes the modification in good faith, for good 39
cause, and in a manner that would not adversely and substantially 40
p. 30 HB 1721
alter the rights, obligations, investment, or return on investment of 1
the franchised new motor vehicle dealer under the existing agreement ; 2
or3
(s) Implement a program or policy that encourages or requires the 4
franchisee to install direct current fast charging stations, unless 5
all of the following are satisfied:6
(i) If the program or policy requires public access to the direct 7
current fast charging stations, the franchisor shall reimburse the 8
dealer for one-half of the cost to install and maintain the stations 9
if the dealer pays the franchisor half of the net income generated 10
from the ongoing use of the stations;11
(ii) The program or policy may not encourage or require the 12
franchisee to install direct current fast charging stations at its 13
dealership location if the franchisee can obtain access to direct 14
current fast charging stations that satisfy the program or policy 15
within a reasonable distance, with a minimum of five miles, of the 16
franchisee's dealership location;17
(iii) The program or policy must be reasonable in light of all 18
existing circumstances including, but not limited to, local 19
conditions, supply constraints, time constraints, advancements in 20
vehicular technology, and electric grid integration; and21
(iv) The program or policy must allow a new motor vehicle dealer 22
the right to purchase or lease goods or services of like kind and 23
quality from an alternative vendor selected by the dealer if the 24
goods or services are to be supplied by a vendor selected, 25
identified, or designated by the manufacturer or distributor.26
(2) Subsection (1)(a), (b), and (c) of this section do not apply 27
to sales to a motor vehicle dealer: (a) For resale to a federal, 28
state, or local government agency; (b) where the vehicles will be 29
sold or donated for use in a program of driver's education; (c) where 30
the sale is made under a manufacturer's bona fide promotional program 31
offering sales incentives or rebates; (d) where the sale of parts or 32
accessories is under a manufacturer's bona fide quantity discount 33
program; or (e) where the sale is made under a manufacturer's bona 34
fide fleet vehicle discount program. For purposes of this subsection, 35
"fleet" means a group of ((fifteen)) 15 or more new motor vehicles 36
purchased or leased by a dealer at one time under a single purchase 37
or lease agreement for use as part of a fleet, and where the dealer 38
has been assigned a fleet identifier code by the department of 39
licensing. 40
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(3) The following definitions apply to this section:1
(a) "Actual price" means the price to be paid by the dealer less 2
any incentive paid by the manufacturer, distributor, factory branch, 3
or factory representative, whether paid to the dealer or the ultimate 4
purchaser of the vehicle. 5
(b) "Control" or "controlling" means (i) the possession of, title 6
to, or control of ten percent or more of the voting equity interest 7
in a person, whether directly or indirectly through a fiduciary, 8
agent, or other intermediary, or (ii) the possession, direct or 9
indirect, of the power to direct or cause the direction of the 10
management or policies of a person, whether through the ownership of 11
voting securities, through director control, by contract, or 12
otherwise, except as expressly provided under the franchise 13
agreement. 14
(c) "Motor vehicles" does not include trucks that are 14,001 15
pounds gross vehicle weight and above or recreational vehicles as 16
defined in RCW 43.22.335. 17
(d) "Operate" means to manage a dealership, whether directly or 18
indirectly. 19
(e) "Own" or "ownership" means to hold the beneficial ownership 20
of one percent or more of any class of equity interest in a 21
dealership, whether the interest is that of a shareholder, partner, 22
limited liability company member, or otherwise. To hold an ownership 23
interest means to have possession of, title to, or control of the 24
ownership interest, whether directly or indirectly through a 25
fiduciary, agent, or other intermediary. 26
(4) A violation of this section is deemed to affect the public 27
interest and constitutes an unlawful and unfair practice under 28
chapter 19.86 RCW. A person aggrieved by an alleged violation of this 29
section may petition the department to have the matter handled as an 30
adjudicative proceeding under chapter 34.05 RCW. 31
Sec. 14. RCW 46.96.230 and 2003 c 21 s 5 are each amended to 32
read as follows: 33
(1) A manufacturer or distributor shall pay a motor vehicle 34
dealer's claim for payment or other compensation due under a 35
manufacturer incentive program within ((thirty)) 30 days after 36
approval of the claim. A claim that is not disapproved or disallowed 37
within ((thirty)) 30 days after the manufacturer or distributor 38
receives the claim is deemed automatically approved. If the motor 39
p. 32 HB 1721
vehicle dealer's claim is not approved, the manufacturer or 1
distributor shall provide the dealer with written notice of the 2
reasons for the disapproval at the time notice of disapproval is 3
given. 4
(2) A manufacturer may not deny a claim based solely on a motor 5
vehicle dealer's incidental failure to comply with a specific claim-6
processing requirement that results in a clerical error or other 7
administrative technicality. 8
(3) A manufacturer may not implement an incentive program that 9
does not provide an equal opportunity for all motor vehicle dealers 10
to qualify based on consideration of dealership location and sales 11
volume, predetermines the price of a vehicle, limits eligibility 12
based on nonvehicle product penetration, or requires use of specific 13
software or service vendors to qualify.14
(4) Notwithstanding the terms of a franchise agreement or other 15
contract with a manufacturer or distributor, a motor vehicle dealer 16
has one year after the expiration of a manufacturer or distributor 17
incentive program to submit a claim for payment or compensation under 18
the program. 19
(((4))) (5) Notwithstanding the terms of a franchise agreement or 20
other contract with a dealer and except as provided in subsection 21
(((5))) (6) of this section, after the expiration of one year after 22
the date of payment of a claim under a manufacturer or distributor 23
incentive program, a manufacturer or distributor may not:24
(a) Charge back to a motor vehicle dealer, whether directly or 25
indirectly, the amount of a claim that has been approved and paid by 26
the manufacturer or distributor under an incentive program;27
(b) Charge back to a motor vehicle dealer, whether directly or 28
indirectly, the cash value of a prize or other thing of value awarded 29
to the dealer under an incentive program; or 30
(c) Audit the records of a motor vehicle dealer to determine 31
compliance with the terms of an incentive program. Where, however, a 32
manufacturer or distributor has reasonable grounds to believe that 33
the dealer committed fraud with respect to the incentive program, the 34
manufacturer or distributor may audit the dealer for a fraudulent 35
claim during any period for which an action for fraud may be 36
commenced under applicable state law. 37
(((5))) (6) Notwithstanding subsection (((4))) (5)(a) and (b) of 38
this section, a manufacturer or distributor may make charge-backs to 39
a motor vehicle dealer if, after completion of an audit of the 40
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dealer's records, the manufacturer or distributor can show, by a 1
preponderance of the evidence, that (a) the claim was intentionally 2
false or fraudulent at the time it was submitted to the manufacturer 3
or distributor, or (b) with respect to a claim under a service 4
incentive program, the repair work was improperly performed in a 5
substandard manner or was unnecessary to correct a defective 6
condition. 7
NEW SECTION. Sec. 15. Sections 1 through 7 of this act 8
constitute a new chapter in Title 46 RCW.9
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