SB 3708

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Full Text of SB3708
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	SB3708 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3708
Introduced 2/5/2026, by Sen. Ram Villivalam
SYNOPSIS AS INTRODUCED:
815 ILCS 710/2	  from Ch. 121 1/2, par. 752
815 ILCS 710/4	  from Ch. 121 1/2, par. 754
815 ILCS 710/6	  from Ch. 121 1/2, par. 756
Amends the Motor Vehicle Franchise Act. Provides that it shall be deemed a violation for a manufacturer, distributor, wholesaler, or other specified entity to distribute new motor vehicles directly to consumers or to circumvent franchise distribution obligations under the Act. Provides that a manufacturer, common entity, or distributor, other than a manufacturer or distributor that was lawfully licensed to sell new motor vehicles directly to customers in the State before January 1, 2022, shall not own or operate a dealership or directly sell new vehicles in the State. Provides that it shall be deemed a violation for any manufacturer with an established franchise dealer network in the State to engage in the sale, lease, or servicing of new motor vehicles in a manner that bypasses or competes with the manufacturer's existing franchisee network. Makes conforming and other changes. Defines terms.
LRB104 20472 SPS 33941 b
A BILL FOR
		SB3708		LRB104 20472 SPS 33941 b
1    AN ACT concerning business.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Motor Vehicle Franchise Act is amended by
5changing Sections 2, 4, and 6 as follows:
6    (815 ILCS 710/2)  (from Ch. 121 1/2, par. 752)
7    Sec. 2. Definitions. As used in this Act, the following
8words shall, unless the context otherwise requires, have the
9following meanings:
10    (a) "Motor vehicle", any motor driven vehicle required to
11be registered under "The Illinois Vehicle Code". Beginning
12January 1, 2010, the term "motor vehicle" also includes any
13engine, transmission, or rear axle, regardless of whether it
14is attached to a vehicle chassis, that is manufactured for
15installation in any motor-driven vehicle with a gross vehicle
16weight rating of more than 16,000 pounds that is required to be
17registered under the Illinois Vehicle Code.
18    (b) "Manufacturer", any person engaged in the business of
19manufacturing or assembling new and unused motor vehicles.
20"Manufacturer" includes a factory branch, distributor, and
21distributor branch.
22    (c) "Factory branch", a branch office maintained by a
23manufacturer which manufactures or assembles motor vehicles
		SB3708	- 2 -	LRB104 20472 SPS 33941 b
1for sale to distributors or motor vehicle dealers or which is
2maintained for directing and supervising the representatives
3of the manufacturer.
4    (d) "Distributor branch", a branch office maintained by a
5distributor or wholesaler who or which sells or distributes
6new or used motor vehicles to motor vehicle dealers.
7    (e) "Factory representative", a representative employed by
8a manufacturer or employed by a factory branch for the purpose
9of making or promoting the sale of motor vehicles or for
10contracting with, supervising, servicing or instructing motor
11vehicle dealers or prospective motor vehicle dealers.
12    (f) "Distributor representative", a representative
13employed by a distributor branch, distributor or wholesaler.
14    (g) "Distributor" or "wholesaler", any person who sells or
15distributes new or used motor vehicles to motor vehicle
16dealers or who maintains distributor representatives within
17the State.
18    (h) "Motor vehicle dealer", any person who, in the
19ordinary course of business, is engaged in the business of
20selling new or used motor vehicles to consumers or other end
21users.
22    (i) "Franchise", an oral or written arrangement for a
23definite or indefinite period in which a manufacturer,
24distributor or wholesaler grants to a motor vehicle dealer a
25license to use a trade name, service mark, or related
26characteristic, and in which there is a community of interest
		SB3708	- 3 -	LRB104 20472 SPS 33941 b
1in the marketing of motor vehicles or services related thereto
2at wholesale, retail, leasing or otherwise.
3    (j) "Franchiser", a manufacturer, distributor or
4wholesaler who grants a franchise to a motor vehicle dealer.
5    (k) "Franchisee", a motor vehicle dealer to whom a
6franchise is offered or granted.
7    (l) "Sale", shall include the issuance, transfer,
8agreement for transfer, exchange, pledge, hypothecation,
9mortgage in any form, whether by transfer in trust or
10otherwise, of any motor vehicle or interest therein or of any
11franchise related thereto; and any option, subscription or
12other contract or solicitation, looking to a sale, or offer or
13attempt to sell in any form, whether oral or written. A gift or
14delivery of any motor vehicle or franchise with respect
15thereto with or as a bonus on account of the sale of anything
16shall be deemed a sale of such motor vehicle or franchise.
17    (m) "Fraud", shall include, in addition to its normal
18legal connotation, the following: a misrepresentation in any
19manner, whether intentionally false or due to reckless
20disregard for truth or falsity, of a material fact; a promise
21or representation not made honestly and in good faith; and an
22intentional failure to disclose a material fact.
23    (n) "Person", a natural person, corporation, partnership,
24trust or other entity, and in case of an entity, it shall
25include any other entity in which it has a majority interest or
26which it effectively controls as well as the individual
		SB3708	- 4 -	LRB104 20472 SPS 33941 b
1officers, directors and other persons in active control of the
2activities of each such entity.
3    (o) "New motor vehicle", a motor vehicle which has not
4been previously sold to any person except a distributor or
5wholesaler or motor vehicle dealer for resale.
6    (p) "Market Area", the franchisee's area of primary
7responsibility as defined in its franchise.
8    (q) "Relevant Market Area", the area within a radius of 10
9miles from the principal location of a franchise or dealership
10if said principal location is in a county having a population
11of more than 300,000 persons; if the principal location of a
12franchise or dealership is in a county having a population of
13less than 300,000 persons, then "relevant market area" shall
14mean the area within a radius of 15 miles from the principal
15location of said franchise or dealership.
16    (r) "Late model vehicle" means a vehicle of the current
17model year and one, 2, or 3 preceding model years for which the
18motor vehicle dealer holds an existing franchise from the
19manufacturer for that same line make.
20    (s) "Factory repurchase vehicle" means a motor vehicle of
21the current model year or a late model vehicle reacquired by
22the manufacturer under an existing agreement or otherwise from
23a fleet, lease or daily rental company or under any State or
24federal law or program relating to allegedly defective new
25motor vehicles, and offered for sale and resold by the
26manufacturer directly or at a factory authorized or sponsored
		SB3708	- 5 -	LRB104 20472 SPS 33941 b
1auction.
2    (t) "Board" means the Motor Vehicle Review Board created
3under this Act.
4    (u) "Secretary of State" means the Secretary of State of
5Illinois.
6    (v) "Good cause" means facts establishing commercial
7reasonableness in lawful or privileged competition and
8business practices as defined at common law.
9    (w) "Common entity" means any person who:
10        (1) is directly or indirectly controlled by, or has 
11    controlling equity interests owned, beneficially or of 
12    record, through any form of ownership structure, by a 
13    manufacturer, importer, distributor, or an affiliate 
14    thereof; or
15        (2) shares common management with a manufacturer, 
16    importer, distributor, or an affiliate thereof, where the 
17    relationships create operational control over the 
18    management or policies of that person.
19    "Common entity" does not include:
20        (1) any person engaged in the manufacturing, assembly, 
21    sale, or distribution of motor vehicle parts, components, 
22    accessories, or vehicle services, provided the person is 
23    not engaged in the sale or distribution of new motor 
24    vehicles; or
25        (2) any financial institution chartered or authorized 
26    to do business in this State, provided the financial 
		SB3708	- 6 -	LRB104 20472 SPS 33941 b
1    institution is not engaged in the sale or distribution of 
2    new motor vehicles.
3(Source: P.A. 100-308, eff. 8-24-17.)
4    (815 ILCS 710/4)  (from Ch. 121 1/2, par. 754)
5    Sec. 4. Unfair competition and practices.
6    (a) The unfair methods of competition and unfair and
7deceptive acts or practices listed in this Section are hereby
8declared to be unlawful. In construing the provisions of this
9Section, the courts may be guided by the interpretations of
10the Federal Trade Commission Act (15 U.S.C. 45 et seq.), as
11from time to time amended.
12    (b) It shall be deemed a violation for any manufacturer,
13factory branch, factory representative, distributor or
14wholesaler, distributor branch, distributor representative or
15motor vehicle dealer to engage in any action with respect to a
16franchise which is arbitrary, in bad faith or unconscionable
17and which causes damage to any of the parties or to the public, 
18including directly or indirectly competing with their 
19franchisees in the sale, lease, or warranty service of new 
20motor vehicles.
21    (c) It shall be deemed a violation for a manufacturer, a
22distributor, a wholesaler, a distributor branch or division, a
23factory branch or division, or a wholesale branch or division,
24or officer, agent or other representative thereof, to coerce,
25or attempt to coerce, any motor vehicle dealer:
		SB3708	- 7 -	LRB104 20472 SPS 33941 b
1        (1) to accept, buy or order any motor vehicle or
2    vehicles, appliances, equipment, parts or accessories
3    therefor, or any other commodity or commodities or service
4    or services which such motor vehicle dealer has not
5    voluntarily ordered or requested except items required by
6    applicable local, state or federal law; or to require a
7    motor vehicle dealer to accept, buy, order or purchase
8    such items in order to obtain any motor vehicle or
9    vehicles or any other commodity or commodities which have
10    been ordered or requested by such motor vehicle dealer;
11        (2) to order or accept delivery of any motor vehicle
12    with special features, appliances, accessories or
13    equipment not included in the list price of the motor
14    vehicles as publicly advertised by the manufacturer
15    thereof, except items required by applicable law; or
16        (3) to order for anyone any parts, accessories,
17    equipment, machinery, tools, appliances or any commodity
18    whatsoever, except items required by applicable law.
19    (c-5) A manufacturer, a distributor, a wholesaler, a
20distributor branch or division, a factory branch or division,
21or a wholesale branch or division, or officer, agent, or other
22representative thereof may not:
23        (1) require a motor vehicle dealer to offer a
24    secondary product; or
25        (2) prohibit a motor vehicle dealer from offering a
26    secondary product, including, but not limited to:
		SB3708	- 8 -	LRB104 20472 SPS 33941 b
1            (A) service contracts;
2            (B) maintenance agreements;
3            (C) extended warranties;
4            (D) protection product guarantees;
5            (E) guaranteed asset protection waivers;
6            (F) insurance;
7            (G) replacement parts;
8            (H) vehicle accessories;
9            (I) oil; or
10            (J) supplies.
11    It is not a violation of this subsection to offer an
12incentive program to motor vehicle dealers to encourage them
13to sell or offer to sell a secondary product approved,
14endorsed, sponsored, or offered by the manufacturer,
15distributor, wholesaler, distributor branch or division,
16factory branch or division, wholesale branch or division, or
17officer, agent, or other representative thereof, provided the
18program does not provide vehicle sales or service incentives.
19    It is not a violation of this subsection to prohibit a
20motor vehicle dealer from using secondary products for any
21repair work paid for under the terms of a warranty, recall,
22service contract, extended warranty, maintenance plan, or
23certified pre-owned vehicle program established or offered by
24the manufacturer, distributor, wholesaler, distributor branch
25or division, factory branch or division, or wholesale branch
26or division, or officer, agent, or other representative
		SB3708	- 9 -	LRB104 20472 SPS 33941 b
1thereof.
2    As used in this subsection, "secondary product" means all
3products that are not new motor vehicles or original equipment
4manufacturer parts.
5    (d) It shall be deemed a violation for a manufacturer, a
6distributor, a wholesaler, a distributor branch or division,
7or officer, agent or other representative thereof:
8        (1) to adopt, change, establish or implement a plan or
9    system for the allocation and distribution of new motor
10    vehicles to motor vehicle dealers which is arbitrary or
11    capricious or to modify an existing plan so as to cause the
12    same to be arbitrary or capricious;
13        (2) to fail or refuse to advise or disclose to any
14    motor vehicle dealer having a franchise or selling
15    agreement, upon written request therefor, the basis upon
16    which new motor vehicles of the same line make are
17    allocated or distributed to motor vehicle dealers in the
18    State and the basis upon which the current allocation or
19    distribution is being made or will be made to such motor
20    vehicle dealer;
21        (3) to refuse to deliver in reasonable quantities and
22    within a reasonable time after receipt of dealer's order,
23    to any motor vehicle dealer having a franchise or selling
24    agreement for the retail sale of new motor vehicles sold
25    or distributed by such manufacturer, distributor,
26    wholesaler, distributor branch or division, factory branch
		SB3708	- 10 -	LRB104 20472 SPS 33941 b
1    or division or wholesale branch or division, any such
2    motor vehicles as are covered by such franchise or selling
3    agreement specifically publicly advertised in the State by
4    such manufacturer, distributor, wholesaler, distributor
5    branch or division, factory branch or division, or
6    wholesale branch or division to be available for immediate
7    delivery. However, the failure to deliver any motor
8    vehicle shall not be considered a violation of this Act if
9    such failure is due to an act of God, a work stoppage or
10    delay due to a strike or labor difficulty, a shortage of
11    materials, a lack of manufacturing capacity, a freight
12    embargo or other cause over which the manufacturer,
13    distributor, or wholesaler, or any agent thereof has no
14    control;
15        (4) to coerce, or attempt to coerce, any motor vehicle
16    dealer to enter into any agreement with such manufacturer,
17    distributor, wholesaler, distributor branch or division,
18    factory branch or division, or wholesale branch or
19    division, or officer, agent or other representative
20    thereof, or to do any other act prejudicial to the dealer
21    by threatening to reduce his allocation of motor vehicles
22    or cancel any franchise or any selling agreement existing
23    between such manufacturer, distributor, wholesaler,
24    distributor branch or division, or factory branch or
25    division, or wholesale branch or division, and the dealer.
26    However, notice in good faith to any motor vehicle dealer
		SB3708	- 11 -	LRB104 20472 SPS 33941 b
1    of the dealer's violation of any terms or provisions of
2    such franchise or selling agreement or of any law or
3    regulation applicable to the conduct of a motor vehicle
4    dealer shall not constitute a violation of this Act;
5        (5) to require a franchisee to participate in an
6    advertising campaign or contest or any promotional
7    campaign, or to purchase or lease any promotional
8    materials, training materials, show room or other display
9    decorations or materials at the expense of the franchisee;
10        (6) to cancel or terminate the franchise or selling
11    agreement of a motor vehicle dealer without good cause and
12    without giving notice as hereinafter provided; to fail or
13    refuse to extend the franchise or selling agreement of a
14    motor vehicle dealer upon its expiration without good
15    cause and without giving notice as hereinafter provided;
16    or, to offer a renewal, replacement or succeeding
17    franchise or selling agreement containing terms and
18    provisions the effect of which is to substantially change
19    or modify the sales and service obligations or capital
20    requirements of the motor vehicle dealer arbitrarily and
21    without good cause and without giving notice as
22    hereinafter provided notwithstanding any term or provision
23    of a franchise or selling agreement.
24            (A) If a manufacturer, distributor, wholesaler,
25        distributor branch or division, factory branch or
26        division or wholesale branch or division intends to
		SB3708	- 12 -	LRB104 20472 SPS 33941 b
1        cancel or terminate a franchise or selling agreement
2        or intends not to extend or renew a franchise or
3        selling agreement on its expiration, it shall send a
4        letter by certified mail, return receipt requested, to
5        the affected franchisee at least 60 days before the
6        effective date of the proposed action, or not later
7        than 10 days before the proposed action when the
8        reason for the action is based upon either of the
9        following:
10                (i) the business operations of the franchisee
11            have been abandoned or the franchisee has failed
12            to conduct customary sales and service operations
13            during customary business hours for at least 7
14            consecutive business days unless such closing is
15            due to an act of God, strike or labor difficulty or
16            other cause over which the franchisee has no
17            control; or
18                (ii) the conviction of or plea of nolo
19            contendere by the motor vehicle dealer or any
20            operator thereof in a court of competent
21            jurisdiction to an offense punishable by
22            imprisonment for more than two years.
23            Each notice of proposed action shall include a
24        detailed statement setting forth the specific grounds
25        for the proposed cancellation, termination, or refusal
26        to extend or renew and shall state that the dealer has
		SB3708	- 13 -	LRB104 20472 SPS 33941 b
1        only 30 days from receipt of the notice to file with
2        the Motor Vehicle Review Board a written protest
3        against the proposed action.
4            (B) If a manufacturer, distributor, wholesaler,
5        distributor branch or division, factory branch or
6        division or wholesale branch or division intends to
7        change substantially or modify the sales and service
8        obligations or capital requirements of a motor vehicle
9        dealer as a condition to extending or renewing the
10        existing franchise or selling agreement of such motor
11        vehicle dealer, it shall send a letter by certified
12        mail, return receipt requested, to the affected
13        franchisee at least 60 days before the date of
14        expiration of the franchise or selling agreement. Each
15        notice of proposed action shall include a detailed
16        statement setting forth the specific grounds for the
17        proposed action and shall state that the dealer has
18        only 30 days from receipt of the notice to file with
19        the Motor Vehicle Review Board a written protest
20        against the proposed action.
21            (C) Within 30 days from receipt of the notice
22        under subparagraphs (A) and (B), the franchisee may
23        file with the Board a written protest against the
24        proposed action.
25            When the protest has been timely filed, the Board
26        shall enter an order, fixing a date (within 60 days of
		SB3708	- 14 -	LRB104 20472 SPS 33941 b
1        the date of the order), time, and place of a hearing on
2        the protest required under Sections 12 and 29 of this
3        Act, and send by certified mail, return receipt
4        requested, a copy of the order to the manufacturer
5        that filed the notice of intention of the proposed
6        action and to the protesting dealer or franchisee.
7            The manufacturer shall have the burden of proof to
8        establish that good cause exists to cancel or
9        terminate, or fail to extend or renew the franchise or
10        selling agreement of a motor vehicle dealer or
11        franchisee, and to change substantially or modify the
12        sales and service obligations or capital requirements
13        of a motor vehicle dealer as a condition to extending
14        or renewing the existing franchise or selling
15        agreement. The determination whether good cause exists
16        to cancel, terminate, or refuse to renew or extend the
17        franchise or selling agreement, or to change or modify
18        the obligations of the dealer as a condition to offer
19        renewal, replacement, or succession shall be made by
20        the Board under subsection (d) of Section 12 of this
21        Act.
22            (D) Notwithstanding the terms, conditions, or
23        provisions of a franchise or selling agreement, the
24        following shall not constitute good cause for
25        cancelling or terminating or failing to extend or
26        renew the franchise or selling agreement: (i) the
		SB3708	- 15 -	LRB104 20472 SPS 33941 b
1        change of ownership or executive management of the
2        franchisee's dealership; or (ii) the fact that the
3        franchisee or owner of an interest in the franchise
4        owns, has an investment in, participates in the
5        management of, or holds a license for the sale of the
6        same or any other line make of new motor vehicles.
7            (E) The manufacturer may not cancel or terminate,
8        or fail to extend or renew a franchise or selling
9        agreement or change or modify the obligations of the
10        franchisee as a condition to offering a renewal,
11        replacement, or succeeding franchise or selling
12        agreement before the hearing process is concluded as
13        prescribed by this Act, and thereafter, if the Board
14        determines that the manufacturer has failed to meet
15        its burden of proof and that good cause does not exist
16        to allow the proposed action;
17        (7) notwithstanding the terms of any franchise
18    agreement, to fail to indemnify and hold harmless its
19    franchised dealers against any judgment or settlement for
20    damages, including, but not limited to, court costs,
21    expert witness fees, reasonable attorneys' fees of the new
22    motor vehicle dealer, and other expenses incurred in the
23    litigation, so long as such fees and costs are reasonable,
24    arising out of complaints, claims, or lawsuits, including,
25    but not limited to, strict liability, negligence,
26    misrepresentation, warranty (express or implied), or
		SB3708	- 16 -	LRB104 20472 SPS 33941 b
1    rescission of the sale as defined in Section 2-608 of the
2    Uniform Commercial Code, to the extent that the judgment
3    or settlement relates to the alleged defective or
4    negligent manufacture, assembly or design of new motor
5    vehicles, parts or accessories or other functions by the
6    manufacturer, beyond the control of the dealer; provided
7    that, in order to provide an adequate defense, the
8    manufacturer receives notice of the filing of a complaint,
9    claim, or lawsuit within 60 days after the filing;
10        (8) to require or otherwise coerce a motor vehicle
11    dealer to underutilize the motor vehicle dealer's
12    facilities by requiring or otherwise coercing the motor
13    vehicle dealer to exclude or remove from the motor vehicle
14    dealer's facilities operations for selling or servicing of
15    any vehicles for which the motor vehicle dealer has a
16    franchise agreement with another manufacturer,
17    distributor, wholesaler, distribution branch or division,
18    or officer, agent, or other representative thereof;
19    provided, however, that, in light of all existing
20    circumstances, (i) the motor vehicle dealer maintains a
21    reasonable line of credit for each make or line of new
22    motor vehicle, (ii) the new motor vehicle dealer remains
23    in compliance with any reasonable facilities requirements
24    of the manufacturer, (iii) no change is made in the
25    principal management of the new motor vehicle dealer, and
26    (iv) the addition of the make or line of new motor vehicles
		SB3708	- 17 -	LRB104 20472 SPS 33941 b
1    would be reasonable. The reasonable facilities requirement
2    set forth in item (ii) of subsection (d)(8) shall not
3    include any requirement that a franchisee establish or
4    maintain exclusive facilities, personnel, or display
5    space. Any decision by a motor vehicle dealer to sell
6    additional makes or lines at the motor vehicle dealer's
7    facility shall be presumed to be reasonable, and the
8    manufacturer shall have the burden to overcome that
9    presumption. A motor vehicle dealer must provide a written
10    notification of its intent to add a make or line of new
11    motor vehicles to the manufacturer. If the manufacturer
12    does not respond to the motor vehicle dealer, in writing,
13    objecting to the addition of the make or line within 60
14    days after the date that the motor vehicle dealer sends
15    the written notification, then the manufacturer shall be
16    deemed to have approved the addition of the make or line;
17        (9) to use or consider the performance of a motor
18    vehicle dealer relating to the sale of the manufacturer's,
19    distributor's, or wholesaler's vehicles or the motor
20    vehicle dealer's ability to satisfy any minimum sales or
21    market share quota or responsibility relating to the sale
22    of the manufacturer's, distributor's, or wholesaler's new
23    vehicles in determining:
24            (A) the motor vehicle dealer's eligibility to
25        purchase program, certified, or other used motor
26        vehicles from the manufacturer, distributor, or
		SB3708	- 18 -	LRB104 20472 SPS 33941 b
1        wholesaler;
2            (B) the volume, type, or model of program,
3        certified, or other used motor vehicles that a motor
4        vehicle dealer is eligible to purchase from the
5        manufacturer, distributor, or wholesaler;
6            (C) the price of any program, certified, or other
7        used motor vehicle that the dealer is eligible to
8        purchase from the manufacturer, distributor, or
9        wholesaler; or
10            (D) the availability or amount of any discount,
11        credit, rebate, or sales incentive that the dealer is
12        eligible to receive from the manufacturer,
13        distributor, or wholesaler for the purchase of any
14        program, certified, or other used motor vehicle
15        offered for sale by the manufacturer, distributor, or
16        wholesaler;
17        (10) to take any adverse action against a dealer
18    pursuant to an export or sale-for-resale prohibition
19    because the dealer sold or leased a vehicle to a customer
20    who either exported the vehicle to a foreign country or
21    resold the vehicle in violation of the prohibition, unless
22    the export or sale-for-resale prohibition policy was
23    provided to the dealer in writing either electronically or
24    on paper, prior to the sale or lease, and the dealer knew
25    or reasonably should have known of the customer's intent
26    to export or resell the vehicle in violation of the
		SB3708	- 19 -	LRB104 20472 SPS 33941 b
1    prohibition at the time of the sale or lease. If the dealer
2    causes the vehicle to be registered and titled in this or
3    any other state, and collects or causes to be collected
4    any applicable sales or use tax to this State, a
5    rebuttable presumption is established that the dealer did
6    not have reason to know of the customer's intent to resell
7    the vehicle;
8        (11) to coerce or require any dealer to construct
9    improvements to his or her facilities or to install new
10    signs or other franchiser image elements that replace or
11    substantially alter those improvements, signs, or
12    franchiser image elements completed within the past 10
13    years that were required and approved by the manufacturer
14    or one of its affiliates. The 10-year period under this
15    paragraph (11) begins to run for a dealer, including that
16    dealer's successors and assigns, on the date that the
17    manufacturer gives final written approval of the facility
18    improvements or installation of signs or other franchiser
19    image elements or the date that the dealer receives a
20    certificate of occupancy, whichever is later. For the
21    purpose of this paragraph (11), the term "substantially
22    alter" does not include routine maintenance, including,
23    but not limited to, interior painting, that is reasonably
24    necessary to keep a dealer facility in attractive
25    condition; or
26        (12) to require a dealer to purchase goods or services
		SB3708	- 20 -	LRB104 20472 SPS 33941 b
1    to make improvements to the dealer's facilities from a
2    vendor selected, identified, or designated by a
3    manufacturer or one of its affiliates by agreement,
4    program, incentive provision, or otherwise without making
5    available to the dealer the option to obtain the goods or
6    services of substantially similar quality and overall
7    design from a vendor chosen by the dealer and approved by
8    the manufacturer; however, approval by the manufacturer
9    shall not be unreasonably withheld, and the dealer's
10    option to select a vendor shall not be available if the
11    manufacturer provides substantial reimbursement for the
12    goods or services offered. "Substantial reimbursement"
13    means an amount equal to or greater than the cost savings
14    that would result if the dealer were to utilize a vendor of
15    the dealer's own selection instead of using the vendor
16    identified by the manufacturer. For the purpose of this
17    paragraph (12), the term "goods" does not include movable
18    displays, brochures, and promotional materials containing
19    material subject to the intellectual property rights of a
20    manufacturer. If signs, other than signs containing the
21    manufacturer's brand or logo or free-standing signs that
22    are not directly attached to a building, or other
23    franchiser image or design elements or trade dress are to
24    be leased to the dealer by a vendor selected, identified,
25    or designated by the manufacturer, the dealer has the
26    right to purchase the signs or other franchiser image or
		SB3708	- 21 -	LRB104 20472 SPS 33941 b
1    design elements or trade dress of substantially similar
2    quality and design from a vendor selected by the dealer if
3    the signs, franchiser image or design elements, or trade
4    dress are approved by the manufacturer. Approval by the
5    manufacturer shall not be unreasonably withheld. This
6    paragraph (12) shall not be construed to allow a dealer or
7    vendor to impair, infringe upon, or eliminate, directly or
8    indirectly, the intellectual property rights of the
9    manufacturer, including, but not limited to, the
10    manufacturer's intellectual property rights in any
11    trademarks or trade dress, or other intellectual property
12    interests owned or controlled by the manufacturer. This
13    paragraph (12) shall not be construed to permit a dealer
14    to erect or maintain signs that do not conform to the
15    manufacturer's intellectual property rights or trademark
16    or trade dress usage guidelines.
17        (13) to establish or utilize any common entity, 
18    affiliate, or spin-off company to sell, lease, or 
19    otherwise distribute new motor vehicles directly to 
20    consumers or to circumvent the manufacturer's new motor 
21    vehicle distribution obligations under this Act, if the 
22    manufacturer, including any common entities, subsidiaries, 
23    or affiliates, currently or previously maintained a 
24    franchise or selling agreement with a motor vehicle dealer 
25    for the retail sale of motor vehicles in this State.
26    (e) It shall be deemed a violation for a manufacturer, a
		SB3708	- 22 -	LRB104 20472 SPS 33941 b
1distributor, a wholesaler, a distributor branch or division or
2officer, agent or other representative thereof:
3        (1) to resort to or use any false or misleading
4    advertisement in connection with his business as such
5    manufacturer, distributor, wholesaler, distributor branch
6    or division or officer, agent or other representative
7    thereof;
8        (2) to offer to sell or lease, or to sell or lease, any
9    new motor vehicle to any motor vehicle dealer at a lower
10    actual price therefor than the actual price offered to any
11    other motor vehicle dealer for the same model vehicle
12    similarly equipped or to utilize any device including, but
13    not limited to, sales promotion plans or programs which
14    result in such lesser actual price or fail to make
15    available to any motor vehicle dealer any preferential
16    pricing, incentive, rebate, finance rate, or low interest
17    loan program offered to competing motor vehicle dealers in
18    other contiguous states. However, the provisions of this
19    paragraph shall not apply to sales to a motor vehicle
20    dealer for resale to any unit of the United States
21    Government, the State or any of its political
22    subdivisions;
23        (3) to offer to sell or lease, or to sell or lease, any
24    new motor vehicle to any person, except a wholesaler,
25    distributor or manufacturer's employees at a lower actual
26    price therefor than the actual price offered and charged
		SB3708	- 23 -	LRB104 20472 SPS 33941 b
1    to a motor vehicle dealer for the same model vehicle
2    similarly equipped or to utilize any device which results
3    in such lesser actual price. However, the provisions of
4    this paragraph shall not apply to sales to a motor vehicle
5    dealer for resale to any unit of the United States
6    Government, the State or any of its political
7    subdivisions;
8        (4) to prevent or attempt to prevent by contract or
9    otherwise any motor vehicle dealer or franchisee from
10    changing the executive management control of the motor
11    vehicle dealer or franchisee unless the franchiser, having
12    the burden of proof, proves that such change of executive
13    management will result in executive management control by
14    a person or persons who are not of good moral character or
15    who do not meet the franchiser's existing and, with
16    consideration given to the volume of sales and service of
17    the dealership, uniformly applied minimum business
18    experience standards in the market area. However, where
19    the manufacturer rejects a proposed change in executive
20    management control, the manufacturer shall give written
21    notice of his reasons to the dealer within 60 days of
22    notice to the manufacturer by the dealer of the proposed
23    change. If the manufacturer does not send a letter to the
24    franchisee by certified mail, return receipt requested,
25    within 60 days from receipt by the manufacturer of the
26    proposed change, then the change of the executive
		SB3708	- 24 -	LRB104 20472 SPS 33941 b
1    management control of the franchisee shall be deemed
2    accepted as proposed by the franchisee, and the
3    manufacturer shall give immediate effect to such change;
4        (5) to prevent or attempt to prevent by contract or
5    otherwise any motor vehicle dealer from establishing or
6    changing the capital structure of his dealership or the
7    means by or through which he finances the operation
8    thereof; provided the dealer meets any reasonable capital
9    standards agreed to between the dealer and the
10    manufacturer, distributor or wholesaler, who may require
11    that the sources, method and manner by which the dealer
12    finances or intends to finance its operation, equipment or
13    facilities be fully disclosed;
14        (6) to refuse to give effect to or prevent or attempt
15    to prevent by contract or otherwise any motor vehicle
16    dealer or any officer, partner or stockholder of any motor
17    vehicle dealer from selling or transferring any part of
18    the interest of any of them to any other person or persons
19    or party or parties unless such sale or transfer is to a
20    transferee who would not otherwise qualify for a new motor
21    vehicle dealers license under the Illinois Vehicle Code or
22    unless the franchiser, having the burden of proof, proves
23    that such sale or transfer is to a person or party who is
24    not of good moral character or does not meet the
25    franchiser's existing and reasonable capital standards
26    and, with consideration given to the volume of sales and
		SB3708	- 25 -	LRB104 20472 SPS 33941 b
1    service of the dealership, uniformly applied minimum
2    business experience standards in the market area. However,
3    nothing herein shall be construed to prevent a franchiser
4    from implementing affirmative action programs providing
5    business opportunities for minorities or from complying
6    with applicable federal, State or local law:
7            (A) If the manufacturer intends to refuse to
8        approve the sale or transfer of all or a part of the
9        interest, then it shall, within 60 days from receipt
10        of the completed application forms generally utilized
11        by a manufacturer to conduct its review and a copy of
12        all agreements regarding the proposed transfer, send a
13        letter by certified mail, return receipt requested,
14        advising the franchisee of any refusal to approve the
15        sale or transfer of all or part of the interest and
16        shall state that the dealer only has 30 days from the
17        receipt of the notice to file with the Motor Vehicle
18        Review Board a written protest against the proposed
19        action. The notice shall set forth specific criteria
20        used to evaluate the prospective transferee and the
21        grounds for refusing to approve the sale or transfer
22        to that transferee. Within 30 days from the
23        franchisee's receipt of the manufacturer's notice, the
24        franchisee may file with the Board a written protest
25        against the proposed action.
26            When a protest has been timely filed, the Board
		SB3708	- 26 -	LRB104 20472 SPS 33941 b
1        shall enter an order, fixing the date (within 60 days
2        of the date of such order), time, and place of a
3        hearing on the protest, required under Sections 12 and
4        29 of this Act, and send by certified mail, return
5        receipt requested, a copy of the order to the
6        manufacturer that filed notice of intention of the
7        proposed action and to the protesting franchisee.
8            The manufacturer shall have the burden of proof to
9        establish that good cause exists to refuse to approve
10        the sale or transfer to the transferee. The
11        determination whether good cause exists to refuse to
12        approve the sale or transfer shall be made by the Board
13        under subdivisions (6)(B). The manufacturer shall not
14        refuse to approve the sale or transfer by a dealer or
15        an officer, partner, or stockholder of a franchise or
16        any part of the interest to any person or persons
17        before the hearing process is concluded as prescribed
18        by this Act, and thereafter if the Board determines
19        that the manufacturer has failed to meet its burden of
20        proof and that good cause does not exist to refuse to
21        approve the sale or transfer to the transferee.
22            (B) Good cause to refuse to approve such sale or
23        transfer under this Section is established when such
24        sale or transfer is to a transferee who would not
25        otherwise qualify for a new motor vehicle dealers
26        license under the Illinois Vehicle Code or such sale
		SB3708	- 27 -	LRB104 20472 SPS 33941 b
1        or transfer is to a person or party who is not of good
2        moral character or does not meet the franchiser's
3        existing and reasonable capital standards and, with
4        consideration given to the volume of sales and service
5        of the dealership, uniformly applied minimum business
6        experience standards in the market area.
7        (7) to obtain money, goods, services, anything of
8    value, or any other benefit from any other person with
9    whom the motor vehicle dealer does business, on account of
10    or in relation to the transactions between the dealer and
11    the other person as compensation, except for services
12    actually rendered, unless such benefit is promptly
13    accounted for and transmitted to the motor vehicle dealer;
14        (8) to grant an additional franchise in the relevant
15    market area of an existing franchise of the same line make
16    or to relocate an existing motor vehicle dealership within
17    or into a relevant market area of an existing franchise of
18    the same line make. However, if the manufacturer wishes to
19    grant such an additional franchise to an independent
20    person in a bona fide relationship in which such person is
21    prepared to make a significant investment subject to loss
22    in such a dealership, or if the manufacturer wishes to
23    relocate an existing motor vehicle dealership, then the
24    manufacturer shall send a letter by certified mail, return
25    receipt requested, to each existing dealer or dealers of
26    the same line make whose relevant market area includes the
		SB3708	- 28 -	LRB104 20472 SPS 33941 b
1    proposed location of the additional or relocated franchise
2    at least 60 days before the manufacturer grants an
3    additional franchise or relocates an existing franchise of
4    the same line make within or into the relevant market area
5    of an existing franchisee of the same line make. Each
6    notice shall set forth the specific grounds for the
7    proposed grant of an additional or relocation of an
8    existing franchise and shall state that the dealer has
9    only 30 days from the date of receipt of the notice to file
10    with the Motor Vehicle Review Board a written protest
11    against the proposed action. Unless the parties agree upon
12    the grant or establishment of the additional or relocated
13    franchise within 30 days from the date the notice was
14    received by the existing franchisee of the same line make
15    or any person entitled to receive such notice, the
16    franchisee or other person may file with the Board a
17    written protest against the grant or establishment of the
18    proposed additional or relocated franchise.
19        When a protest has been timely filed, the Board shall
20    enter an order fixing a date (within 60 days of the date of
21    the order), time, and place of a hearing on the protest,
22    required under Sections 12 and 29 of this Act, and send by
23    certified or registered mail, return receipt requested, a
24    copy of the order to the manufacturer that filed the
25    notice of intention to grant or establish the proposed
26    additional or relocated franchise and to the protesting
		SB3708	- 29 -	LRB104 20472 SPS 33941 b
1    dealer or dealers of the same line make whose relevant
2    market area includes the proposed location of the
3    additional or relocated franchise.
4        When more than one protest is filed against the grant
5    or establishment of the additional or relocated franchise
6    of the same line make, the Board may consolidate the
7    hearings to expedite disposition of the matter. The
8    manufacturer shall have the burden of proof to establish
9    that good cause exists to allow the grant or establishment
10    of the additional or relocated franchise. The manufacturer
11    may not grant or establish the additional franchise or
12    relocate the existing franchise before the hearing process
13    is concluded as prescribed by this Act, and thereafter if
14    the Board determines that the manufacturer has failed to
15    meet its burden of proof and that good cause does not exist
16    to allow the grant or establishment of the additional
17    franchise or relocation of the existing franchise.
18        The determination whether good cause exists for
19    allowing the grant or establishment of an additional
20    franchise or relocated existing franchise, shall be made
21    by the Board under subsection (c) of Section 12 of this
22    Act. If the manufacturer seeks to enter into a contract,
23    agreement or other arrangement with any person,
24    establishing any additional motor vehicle dealership or
25    other facility, limited to the sale of factory repurchase
26    vehicles or late model vehicles, then the manufacturer
		SB3708	- 30 -	LRB104 20472 SPS 33941 b
1    shall follow the notice procedures set forth in this
2    Section and the determination whether good cause exists
3    for allowing the proposed agreement shall be made by the
4    Board under subsection (c) of Section 12, with the
5    manufacturer having the burden of proof.
6            A. (Blank).
7            B. For the purposes of this Section, appointment
8        of a successor motor vehicle dealer at the same
9        location as its predecessor, or within 2 miles of such
10        location, or the relocation of an existing dealer or
11        franchise within 2 miles of the relocating dealer's or
12        franchisee's existing location, shall not be construed
13        as a grant, establishment or the entering into of an
14        additional franchise or selling agreement, or a
15        relocation of an existing franchise. The reopening of
16        a motor vehicle dealership that has not been in
17        operation for 18 months or more shall be deemed the
18        grant of an additional franchise or selling agreement.
19            C. This Section does not apply to the relocation
20        of an existing dealership or franchise in a county
21        having a population of more than 300,000 persons when
22        the new location is within the dealer's current
23        relevant market area, provided the new location is
24        more than 7 miles from the nearest dealer of the same
25        line make. This Section does not apply to the
26        relocation of an existing dealership or franchise in a
		SB3708	- 31 -	LRB104 20472 SPS 33941 b
1        county having a population of less than 300,000
2        persons when the new location is within the dealer's
3        current relevant market area, provided the new
4        location is more than 12 miles from the nearest dealer
5        of the same line make. A dealer that would be farther
6        away from the new location of an existing dealership
7        or franchise of the same line make after a relocation
8        may not file a written protest against the relocation
9        with the Motor Vehicle Review Board.
10            D. Nothing in this Section shall be construed to
11        prevent a franchiser from implementing affirmative
12        action programs providing business opportunities for
13        minorities or from complying with applicable federal,
14        State or local law;
15        (9) to require a motor vehicle dealer to assent to a
16    release, assignment, novation, waiver or estoppel which
17    would relieve any person from liability imposed by this
18    Act;
19        (10) to prevent or refuse to give effect to the
20    succession to the ownership or management control of a
21    dealership by any legatee under the will of a dealer or to
22    an heir under the laws of descent and distribution of this
23    State unless the franchisee has designated a successor to
24    the ownership or management control under the succession
25    provisions of the franchise. Unless the franchiser, having
26    the burden of proof, proves that the successor is a person
		SB3708	- 32 -	LRB104 20472 SPS 33941 b
1    who is not of good moral character or does not meet the
2    franchiser's existing and reasonable capital standards
3    and, with consideration given to the volume of sales and
4    service of the dealership, uniformly applied minimum
5    business experience standards in the market area, any
6    designated successor of a dealer or franchisee may succeed
7    to the ownership or management control of a dealership
8    under the existing franchise if:
9                (i) The designated successor gives the
10            franchiser written notice by certified mail,
11            return receipt requested, of his or her intention
12            to succeed to the ownership of the dealer within
13            60 days of the dealer's death or incapacity; and
14                (ii) The designated successor agrees to be
15            bound by all the terms and conditions of the
16            existing franchise.
17        Notwithstanding the foregoing, in the event the motor
18    vehicle dealer or franchisee and manufacturer have duly
19    executed an agreement concerning succession rights prior
20    to the dealer's death or incapacitation, the agreement
21    shall be observed.
22            (A) If the franchiser intends to refuse to honor
23        the successor to the ownership of a deceased or
24        incapacitated dealer or franchisee under an existing
25        franchise agreement, the franchiser shall send a
26        letter by certified mail, return receipt requested, to
		SB3708	- 33 -	LRB104 20472 SPS 33941 b
1        the designated successor within 60 days from receipt
2        of a proposal advising of its intent to refuse to honor
3        the succession and to discontinue the existing
4        franchise agreement and shall state that the
5        designated successor only has 30 days from the receipt
6        of the notice to file with the Motor Vehicle Review
7        Board a written protest against the proposed action.
8        The notice shall set forth the specific grounds for
9        the refusal to honor the succession and discontinue
10        the existing franchise agreement.
11            If notice of refusal is not timely served upon the
12        designated successor, the franchise agreement shall
13        continue in effect subject to termination only as
14        otherwise permitted by paragraph (6) of subsection (d)
15        of Section 4 of this Act.
16            Within 30 days from the date the notice was
17        received by the designated successor or any other
18        person entitled to notice, the designee or other
19        person may file with the Board a written protest
20        against the proposed action.
21            When a protest has been timely filed, the Board
22        shall enter an order, fixing a date (within 60 days of
23        the date of the order), time, and place of a hearing on
24        the protest, required under Sections 12 and 29 of this
25        Act, and send by certified mail, return receipt
26        requested, a copy of the order to the franchiser that
		SB3708	- 34 -	LRB104 20472 SPS 33941 b
1        filed the notice of intention of the proposed action
2        and to the protesting designee or such other person.
3            The manufacturer shall have the burden of proof to
4        establish that good cause exists to refuse to honor
5        the succession and discontinue the existing franchise
6        agreement. The determination whether good cause exists
7        to refuse to honor the succession shall be made by the
8        Board under subdivision (B) of this paragraph (10).
9        The manufacturer shall not refuse to honor the
10        succession or discontinue the existing franchise
11        agreement before the hearing process is concluded as
12        prescribed by this Act, and thereafter if the Board
13        determines that it has failed to meet its burden of
14        proof and that good cause does not exist to refuse to
15        honor the succession and discontinue the existing
16        franchise agreement.
17            (B) No manufacturer shall impose any conditions
18        upon honoring the succession and continuing the
19        existing franchise agreement with the designated
20        successor other than that the franchisee has
21        designated a successor to the ownership or management
22        control under the succession provisions of the
23        franchise, or that the designated successor is of good
24        moral character or meets the reasonable capital
25        standards and, with consideration given to the volume
26        of sales and service of the dealership, uniformly
		SB3708	- 35 -	LRB104 20472 SPS 33941 b
1        applied minimum business experience standards in the
2        market area;
3        (11) to prevent or refuse to approve a proposal to
4    establish a successor franchise at a location previously
5    approved by the franchiser when submitted with the
6    voluntary termination by the existing franchisee unless
7    the successor franchisee would not otherwise qualify for a
8    new motor vehicle dealer's license under the Illinois
9    Vehicle Code or unless the franchiser, having the burden
10    of proof, proves that such proposed successor is not of
11    good moral character or does not meet the franchiser's
12    existing and reasonable capital standards and, with
13    consideration given to the volume of sales and service of
14    the dealership, uniformly applied minimum business
15    experience standards in the market area. However, when
16    such a rejection of a proposal is made, the manufacturer
17    shall give written notice of its reasons to the franchisee
18    within 60 days of receipt by the manufacturer of the
19    proposal. However, nothing herein shall be construed to
20    prevent a franchiser from implementing affirmative action
21    programs providing business opportunities for minorities,
22    or from complying with applicable federal, State or local
23    law;
24        (12) to prevent or refuse to grant a franchise to a
25    person because such person owns, has investment in or
26    participates in the management of or holds a franchise for
		SB3708	- 36 -	LRB104 20472 SPS 33941 b
1    the sale of another make or line of motor vehicles within 7
2    miles of the proposed franchise location in a county
3    having a population of more than 300,000 persons, or
4    within 12 miles of the proposed franchise location in a
5    county having a population of less than 300,000 persons;
6        (13) to prevent or attempt to prevent any new motor
7    vehicle dealer from establishing any additional motor
8    vehicle dealership or other facility limited to the sale
9    of factory repurchase vehicles or late model vehicles or
10    otherwise offering for sale factory repurchase vehicles of
11    the same line make at an existing franchise by failing to
12    make available any contract, agreement or other
13    arrangement which is made available or otherwise offered
14    to any person; or
15        (14) to exercise a right of first refusal or other
16    right to acquire a franchise from a dealer, unless the
17    manufacturer:
18            (A) notifies the dealer in writing that it intends
19        to exercise its right to acquire the franchise not
20        later than 60 days after the manufacturer's or
21        distributor's receipt of a notice of the proposed
22        transfer from the dealer and all information and
23        documents reasonably and customarily required by the
24        manufacturer or distributor supporting the proposed
25        transfer;
26            (B) pays to the dealer the same or greater
		SB3708	- 37 -	LRB104 20472 SPS 33941 b
1        consideration as the dealer has contracted to receive
2        in connection with the proposed transfer or sale of
3        all or substantially all of the dealership assets,
4        stock, or other ownership interest, including the
5        purchase or lease of all real property, leasehold, or
6        improvements related to the transfer or sale of the
7        dealership. Upon exercise of the right of first
8        refusal or such other right, the manufacturer or
9        distributor shall have the right to assign the lease
10        or to convey the real property;
11            (C) assumes all of the duties, obligations, and
12        liabilities contained in the agreements that were to
13        be assumed by the proposed transferee and with respect
14        to which the manufacturer or distributor exercised the
15        right of first refusal or other right to acquire the
16        franchise;
17            (D) reimburses the proposed transferee for all
18        reasonable expenses incurred in evaluating,
19        investigating, and negotiating the transfer of the
20        dealership prior to the manufacturer's or
21        distributor's exercise of its right of first refusal
22        or other right to acquire the dealership. For purposes
23        of this paragraph, "reasonable expenses" includes the
24        usual and customary legal and accounting fees charged
25        for similar work, as well as expenses associated with
26        the evaluation and investigation of any real property
		SB3708	- 38 -	LRB104 20472 SPS 33941 b
1        on which the dealership is operated. The proposed
2        transferee shall submit an itemized list of its
3        expenses to the manufacturer or distributor not later
4        than 30 days after the manufacturer's or distributor's
5        exercise of the right of first refusal or other right
6        to acquire the motor vehicle franchise. The
7        manufacturer or distributor shall reimburse the
8        proposed transferee for its expenses not later than 90
9        days after receipt of the itemized list. A
10        manufacturer or distributor may request to be provided
11        with the itemized list of expenses before exercising
12        the manufacturer's or distributor's right of first
13        refusal.
14        Except as provided in this paragraph (14), neither the
15    selling dealer nor the manufacturer or distributor shall
16    have any liability to any person as a result of a
17    manufacturer or distributor exercising its right of first
18    refusal.
19        For the purpose of this paragraph, "proposed
20    transferee" means the person to whom the franchise would
21    have been transferred to, or was proposed to be
22    transferred to, had the right of first refusal or other
23    right to acquire the franchise not been exercised by the
24    manufacturer or distributor.
25    (f) It is deemed a violation for a manufacturer, any 
26parent company, subsidiary, affiliate, common entity, or agent 
		SB3708	- 39 -	LRB104 20472 SPS 33941 b
1of the manufacturer, a distributor, a wholesaler, a
2distributor branch or division, a factory branch or division,
3or a wholesale branch or division, or officer, agent, broker,
4shareholder, except a shareholder of 1% or less of the
5outstanding shares of any class of securities of a
6manufacturer, distributor, or wholesaler which is a publicly
7traded corporation, or other representative, directly or
8indirectly, to own or operate a place of business as a motor
9vehicle franchisee or motor vehicle financing affiliate or to 
10perform warranty service for retail consumers. [, except that, ]
11[this subsection shall not prohibit]
12    A manufacturer, common entity, or distributor, other than 
13a manufacturer or distributor that was lawfully licensed to 
14sell new motor vehicles directly to customers in this State 
15before January 1, 2022, shall not own or operate a dealership 
16or directly sell new vehicles in this State, nor shall such 
17entities be eligible for a new motor vehicle dealer license 
18under the Illinois Vehicle Code, regardless of the entity's 
19branding as separate or independent of the controlling 
20manufacturer.
21    This subsection does not prohibit:
22        (1) the ownership or operation of a place of business
23    by a manufacturer, distributor, or wholesaler for a
24    period, not to exceed 18 months, during the transition
25    from one motor vehicle franchisee to another;
26        (2) the investment in a motor vehicle franchisee by a
		SB3708	- 40 -	LRB104 20472 SPS 33941 b
1    manufacturer, distributor, or wholesaler if the investment
2    is for the sole purpose of enabling a partner or
3    shareholder in that motor vehicle franchisee to acquire an
4    interest in that motor vehicle franchisee and that partner
5    or shareholder is not otherwise employed by or associated
6    with the manufacturer, distributor, or wholesaler and
7    would not otherwise have the requisite capital investment
8    funds to invest in the motor vehicle franchisee, and has
9    the right to purchase the entire equity interest of the
10    manufacturer, distributor, or wholesaler in the motor
11    vehicle franchisee within a reasonable period of time not
12    to exceed 5 years; or
13        (3) the ownership or operation of a place of business
14    by a manufacturer that manufactures only diesel engines
15    for installation in trucks having a gross vehicle weight
16    rating of more than 16,000 pounds that are required to be
17    registered under the Illinois Vehicle Code, provided that:
18            (A) the manufacturer does not otherwise
19        manufacture, distribute, or sell motor vehicles as
20        defined under Section 1-217 of the Illinois Vehicle
21        Code;
22            (B) the manufacturer owned a place of business and
23        it was in operation as of January 1, 2016;
24            (C) the manufacturer complies with all obligations
25        owed to dealers that are not owned, operated, or
26        controlled by the manufacturer, including, but not
		SB3708	- 41 -	LRB104 20472 SPS 33941 b
1        limited to those obligations arising pursuant to
2        Section 6;
3            (D) to further avoid any acts or practices, the
4        effect of which may be to lessen or eliminate
5        competition, the manufacturer provides to dealers on
6        substantially equal terms access to all support for
7        completing repairs, including, but not limited to,
8        parts and assemblies, training, and technical service
9        bulletins, and other information concerning repairs
10        that the manufacturer provides to facilities that are
11        owned, operated, or controlled by the manufacturer;
12        and
13            (E) the manufacturer does not require that
14        warranty repair work be performed by a
15        manufacturer-owned repair facility and the
16        manufacturer provides any dealer that has an agreement
17        with the manufacturer to sell and perform warranty
18        repairs on the manufacturer's engines the opportunity
19        to perform warranty repairs on those engines,
20        regardless of whether the dealer sold the truck into
21        which the engine was installed.
22    (g) Notwithstanding the terms, provisions, or conditions
23of any agreement or waiver, it shall be deemed a violation for
24a manufacturer, a distributor, a wholesaler, a distributor
25branch or division, a factory branch or division, or a
26wholesale branch or division, or officer, agent, common 
		SB3708	- 42 -	LRB104 20472 SPS 33941 b
1entity, or other representative thereof, to directly or
2indirectly condition the awarding of a franchise to a
3prospective new motor vehicle dealer, the addition of a line
4make or franchise to an existing dealer, the renewal of a
5franchise of an existing dealer, the approval of the
6relocation of an existing dealer's facility, or the approval
7of the sale or transfer of the ownership of a franchise on the
8willingness of a dealer, proposed new dealer, or owner of an
9interest in the dealership facility to enter into a site
10control agreement or exclusive use agreement unless separate
11and reasonable consideration was offered and accepted for that
12agreement.
13    For purposes of this subsection (g), the terms "site
14control agreement" and "exclusive use agreement" include any
15agreement that has the effect of either (i) requiring that the
16dealer establish or maintain exclusive dealership facilities;
17or (ii) restricting the ability of the dealer, or the ability
18of the dealer's lessor in the event the dealership facility is
19being leased, to transfer, sell, lease, or change the use of
20the dealership premises, whether by sublease, lease,
21collateral pledge of lease, or other similar agreement. "Site
22control agreement" and "exclusive use agreement" also include
23a manufacturer restricting the ability of a dealer to
24transfer, sell, or lease the dealership premises by right of
25first refusal to purchase or lease, option to purchase, or
26option to lease if the transfer, sale, or lease of the
		SB3708	- 43 -	LRB104 20472 SPS 33941 b
1dealership premises is to a person who is an immediate family
2member of the dealer. For the purposes of this subsection (g),
3"immediate family member" means a spouse, parent, son,
4daughter, son-in-law, daughter-in-law, brother, and sister.
5    If a manufacturer exercises any right of first refusal to
6purchase or lease or option to purchase or lease with regard to
7a transfer, sale, or lease of the dealership premises to a
8person who is not an immediate family member of the dealer,
9then (1) within 60 days from the receipt of the completed
10application forms generally utilized by a manufacturer to
11conduct its review and a copy of all agreements regarding the
12proposed transfer, the manufacturer must notify the dealer of
13its intent to exercise the right of first refusal to purchase
14or lease or option to purchase or lease and (2) the exercise of
15the right of first refusal to purchase or lease or option to
16purchase or lease must result in the dealer receiving
17consideration, terms, and conditions that either are the same
18as or greater than that which they have contracted to receive
19in connection with the proposed transfer, sale, or lease of
20the dealership premises.
21    Any provision contained in any agreement entered into on
22or after November 25, 2009 (the effective date of Public Act
2396-824) that is inconsistent with the provisions of this
24subsection (g) shall be voidable at the election of the
25affected dealer, prospective dealer, or owner of an interest
26in the dealership facility.
		SB3708	- 44 -	LRB104 20472 SPS 33941 b
1    (h) For purposes of this subsection:
2    "Successor manufacturer" means any motor vehicle
3manufacturer that, on or after January 1, 2009, acquires,
4succeeds to, or assumes any part of the business of another
5manufacturer, referred to as the "predecessor manufacturer",
6as the result of any of the following:
7        (i) A change in ownership, operation, or control of
8    the predecessor manufacturer by sale or transfer of
9    assets, corporate stock or other equity interest,
10    assignment, merger, consolidation, combination, joint
11    venture, redemption, court-approved sale, operation of law
12    or otherwise.
13        (ii) The termination, suspension, or cessation of a
14    part or all of the business operations of the predecessor
15    manufacturer.
16        (iii) The discontinuance of the sale of the product
17    line.
18        (iv) A change in distribution system by the
19    predecessor manufacturer, whether through a change in
20    distributor or the predecessor manufacturer's decision to
21    cease conducting business through a distributor
22    altogether.
23    "Former Franchisee" means a new motor vehicle dealer that
24has entered into a franchise with a predecessor manufacturer
25and that has either:
26        (i) entered into a termination agreement or deferred
		SB3708	- 45 -	LRB104 20472 SPS 33941 b
1    termination agreement with a predecessor or successor
2    manufacturer related to such franchise; or
3        (ii) has had such franchise canceled, terminated,
4    nonrenewed, noncontinued, rejected, nonassumed, or
5    otherwise ended.
6    For a period of 3 years from: (i) the date that a successor
7manufacturer acquires, succeeds to, or assumes any part of the
8business of a predecessor manufacturer; (ii) the last day that
9a former franchisee is authorized to remain in business as a
10franchised dealer with respect to a particular franchise under
11a termination agreement or deferred termination agreement with
12a predecessor or successor manufacturer; (iii) the last day
13that a former franchisee that was cancelled, terminated,
14nonrenewed, noncontinued, rejected, nonassumed, or otherwise
15ended by a predecessor or successor manufacturer is authorized
16to remain in business as a franchised dealer with respect to a
17particular franchise; or (iv) November 25, 2009 (the effective
18date of Public Act 96-824), whichever is latest, it shall be
19unlawful for such successor manufacturer to enter into a same
20line make franchise with any person or to permit the
21relocation of any existing same line make franchise, for a
22line make of the predecessor manufacturer that would be
23located or relocated within the relevant market area of a
24former franchisee who owned or leased a dealership facility in
25that relevant market area without first offering the
26additional or relocated franchise to the former franchisee, or
		SB3708	- 46 -	LRB104 20472 SPS 33941 b
1the designated successor of such former franchisee in the
2event the former franchisee is deceased or a person with a
3disability, at no cost and without any requirements or
4restrictions other than those imposed generally on the
5manufacturer's other franchisees at that time, unless one of
6the following applies:
7        (1) As a result of the former franchisee's
8    cancellation, termination, noncontinuance, or nonrenewal
9    of the franchise, the predecessor manufacturer had
10    consolidated the line make with another of its line makes
11    for which the predecessor manufacturer had a franchisee
12    with a then-existing dealership facility located within
13    that relevant market area.
14        (2) The successor manufacturer has paid the former
15    franchisee, or the designated successor of such former
16    franchisee in the event the former franchisee is deceased
17    or a person with a disability, the fair market value of the
18    former franchisee's franchise on (i) the date the
19    franchiser announces the action which results in the
20    termination, cancellation, or nonrenewal; or (ii) the date
21    the action which results in termination, cancellation, or
22    nonrenewal first became general knowledge; or (iii) the
23    day 12 months prior to the date on which the notice of
24    termination, cancellation, or nonrenewal is issued,
25    whichever amount is higher. Payment is due within 90 days
26    of the effective date of the termination, cancellation, or
		SB3708	- 47 -	LRB104 20472 SPS 33941 b
1    nonrenewal. If the termination, cancellation, or
2    nonrenewal is due to a manufacturer's change in
3    distributors, the manufacturer may avoid paying fair
4    market value to the dealer if the new distributor or the
5    manufacturer offers the dealer a franchise agreement with
6    terms acceptable to the dealer.
7        (3) The successor manufacturer proves that it would
8    have had good cause to terminate the franchise agreement
9    of the former franchisee, or the successor of the former
10    franchisee under item (e)(10) in the event that the former
11    franchisee is deceased or a person with a disability. The
12    determination of whether the successor manufacturer would
13    have had good cause to terminate the franchise agreement
14    of the former franchisee, or the successor of the former
15    franchisee, shall be made by the Board under subsection
16    (d) of Section 12. A successor manufacturer that seeks to
17    assert that it would have had good cause to terminate a
18    former franchisee, or the successor of the former
19    franchisee, must file a petition seeking a hearing on this
20    issue before the Board and shall have the burden of
21    proving that it would have had good cause to terminate the
22    former franchisee or the successor of the former
23    franchisee. No successor dealer, other than the former
24    franchisee, may be appointed or franchised by the
25    successor manufacturer within the relevant market area of
26    the former franchisee until the Board has held a hearing
		SB3708	- 48 -	LRB104 20472 SPS 33941 b
1    and rendered a determination on the issue of whether the
2    successor manufacturer would have had good cause to
3    terminate the former franchisee.
4    In the event that a successor manufacturer attempts to
5enter into a same line make franchise with any person or to
6permit the relocation of any existing line make franchise
7under this subsection (h) at a location that is within the
8relevant market area of 2 or more former franchisees, then the
9successor manufacturer may not offer it to any person other
10than one of those former franchisees unless the successor
11manufacturer can prove that at least one of the 3 exceptions in
12items (1), (2), and (3) of this subsection (h) applies to each
13of those former franchisees.
14    (i) It shall be deemed a violation of this Section for any 
15manufacturer with an established franchise dealer network in 
16this State, either directly or indirectly, through any parent, 
17subsidiary, affiliate, or agent of the manufacturer, any 
18person under common ownership or control, or common entity, to 
19engage in the sale, lease, or warranty servicing of new motor 
20vehicles in a manner that bypasses or competes with the 
21manufacturer's existing franchisee network, including, but not 
22limited to:
23        (1) engaging in practices intended to circumvent, 
24    evade, or undermine the rights, obligations, or 
25    protections afforded to franchisees under this Act; or
26        (2) establishing or using newly branded entities, 
		SB3708	- 49 -	LRB104 20472 SPS 33941 b
1    spin-offs, or affiliated or subsidiary entities to conduct 
2    retail operations outside the franchise system.
3    (j) A manufacturer or distributor shall not engage in the 
4sale of new motor vehicles directly to the general public in 
5this State unless the manufacturer or distributor was lawfully 
6licensed to sell new motor vehicles directly to consumers in 
7this State before January 1, 2022.
8(Source: P.A. 102-433, eff. 1-1-22.)
9    (815 ILCS 710/6)  (from Ch. 121 1/2, par. 756)
10    Sec. 6. Warranty agreements; claims; approval; payment;
11written disapproval.
12    (a) Every manufacturer, distributor, wholesaler,
13distributor branch or division, factory branch or division, or
14wholesale branch or division shall properly fulfill any
15warranty agreement and adequately and fairly compensate each
16of its motor vehicle dealers for labor and parts.
17    (b) Adequate and fair compensation requires the
18manufacturer to pay each dealer no less than the amount the
19retail customer pays for the same services with regard to rate
20and time.
21    Any time guide previously agreed to by the manufacturer
22and the dealer for extended warranty repairs may be used in
23lieu of actual time expended. In the event that a time guide
24has not been agreed to for warranty repairs, or said time guide
25does not define time for an applicable warranty repair, the
		SB3708	- 50 -	LRB104 20472 SPS 33941 b
1manufacturer's time guide shall be used, multiplied by 1.5.
2    In no event shall such compensation fail to include full
3compensation for diagnostic work, as well as repair service,
4labor, and parts. Time allowances for the diagnosis and
5performance of warranty work and service shall be no less than
6charged to retail customers for the same work to be performed.
7    No warranty or factory compensated repairs shall be
8excluded from this requirement, including recalls or other
9voluntary stop-sell repairs required by the manufacturer. If a
10manufacturer is required to issue a recall, the dealer will be
11compensated for labor time as above stated.
12    Furthermore, manufacturers shall pay the dealer the same
13effective labor rate (using the 100 sequential repair orders
14chosen and submitted by the dealer less simple maintenance
15repair orders) that the dealer receives for customer-pay
16repairs. This requirement includes vehicle diagnostic times
17for all warranty repairs. Additionally, if a technician is
18required to communicate with a Technical Assistance
19Center/Engineering/or some external manufacturer source in
20order to provide a warranty repair, the manufacturer shall pay
21for the time from start of communications (including hold
22time) until the communication is complete.
23    The dealer may submit a request to the manufacturer for
24warranty labor rate increases a maximum of once per calendar
25year.
26    A claim made by a franchised motor vehicle dealer for
		SB3708	- 51 -	LRB104 20472 SPS 33941 b
1compensation under this Section shall be either approved or
2disapproved within 30 days after the claim is submitted to the
3manufacturer in the manner and on the forms the manufacturer
4reasonably prescribes. An approved claim shall be paid within
530 days after its approval. If a claim is not specifically
6disapproved in writing or by electronic transmission within 30
7days after the date on which the manufacturer receives it, the
8claim shall be considered to be approved and payment shall
9follow within 30 days.
10    In no event shall compensation to a motor vehicle dealer
11for labor times and labor rates be less than the rates charged
12by such dealer for like service to retail customers for
13nonwarranty service and repairs. Additionally, the
14manufacturer shall reimburse the dealer for any parts provided
15in satisfaction of a warranty at the prevailing retail price
16charged by that dealer for the same parts when not provided in
17satisfaction of a warranty; provided that such dealer's
18prevailing retail price is not unreasonable when compared with
19that of the holders of motor vehicle franchises of [from] the
20same line make [manufacturer] for identical parts in the
21geographic area in which the dealer is engaged in business.
22    There shall be no reduction in payments due to
23preestablished market norms or market averages. Manufacturers
24are prohibited from establishing restrictions or limitations
25of customer repair frequency due to failure rate indexes or
26national failure averages.
		SB3708	- 52 -	LRB104 20472 SPS 33941 b
1    No debit reduction or charge back of any item on a warranty
2repair order may be made absent a finding of fraud or illegal
3actions by the dealer.
4    A warranty claim timely made shall not be deemed invalid
5solely because unavailable parts cause additional use and
6mileage on the vehicle.
7    If a manufacturer imposes a recall or stop sale on any new
8vehicle in a dealer's inventory that prevents the sale of the
9vehicle, the manufacturer shall compensate the dealer for any
10interest and storage until the vehicle is repaired and made
11ready for sale.
12    Manufacturers are not permitted to impose any form of cost
13recovery fees or surcharges against a franchised auto
14dealership for payments made in accordance with this Section.
15    All claims, either original or resubmitted, made by motor
16vehicle dealers hereunder and under Section 5 for such labor
17and parts shall be either approved or disapproved within 30
18days following their submission. All approved claims shall be
19paid within 30 days following their approval. The motor
20vehicle dealer who submits a claim which is disapproved shall
21be notified in writing of the disapproval within the same
22period, and each such notice shall state the specific grounds
23upon which the disapproval is based. The motor vehicle dealer
24shall be permitted to correct and resubmit such disapproved
25claims within 30 days of receipt of disapproval. Any claims
26not specifically disapproved in writing within 30 days from
		SB3708	- 53 -	LRB104 20472 SPS 33941 b
1their submission shall be deemed approved and payment shall
2follow within 30 days. The manufacturer or franchiser shall
3have the right to require reasonable documentation for claims
4and to audit such claims within a one year period from the date
5the claim was paid or credit issued by the manufacturer or
6franchiser, and to charge back any false or unsubstantiated
7claims. The audit and charge back provisions of this Section
8also apply to all other incentive and reimbursement programs
9for a period of one year after the date the claim was paid or
10credit issued by the manufacturer or franchiser. However, the
11manufacturer retains the right to charge back any fraudulent
12claim if the manufacturer establishes in a court of competent
13jurisdiction in this State that the claim is fraudulent.
14    (c) The motor vehicle franchiser shall not, by agreement,
15by restrictions upon reimbursement, or otherwise, restrict the
16nature and extent of services to be rendered or parts to be
17provided so that such restriction prevents the motor vehicle
18franchisee from satisfying the warranty by rendering services
19in a good and workmanlike manner and providing parts which are
20required in accordance with generally accepted standards. Any
21such restriction shall constitute a prohibited practice.
22    (d) For the purposes of this Section, the "prevailing
23retail price charged by that dealer for the same parts" means
24the price paid by the motor vehicle franchisee for parts,
25including all shipping and other charges, multiplied by the
26sum of 1.0 and the franchisee's average percentage markup over
		SB3708	- 54 -	LRB104 20472 SPS 33941 b
1the price paid by the motor vehicle franchisee for parts
2purchased by the motor vehicle franchisee from the motor
3vehicle franchiser and sold at retail. The motor vehicle
4franchisee may establish average percentage markup under this
5Section by submitting to the motor vehicle franchiser 100
6sequential customer paid service repair orders or 90 days of
7customer paid service repair orders, whichever is less,
8covering repairs made no more than 180 days before the
9submission, and declaring what the average percentage markup
10is. The average percentage markup so declared shall go into
11effect 30 days following the declaration, subject to audit of
12the submitted repair orders by the motor vehicle franchiser
13and adjustment of the average percentage markup based on that
14audit. Any audit must be conducted within 30 days following
15the declaration. Only retail sales not involving warranty
16repairs, parts covered by subsection (e) of this Section, or
17parts supplied for routine vehicle maintenance, shall be
18considered in calculating average percentage markup. For the 
19purpose of this subsection, "routine maintenance" includes, 
20but is not limited to: (i) the replacement of oil or other 
21fluids, filters, batteries for internal combustion engine 
22vehicles, bulbs, brake pads, rotors, nuts, bolts, or 
23fasteners; (ii) the replacement of or work on tires or wheels, 
24including wheel alignments and tire and wheel rotations; and 
25(iii) the installation of an accessory. No motor vehicle
26franchiser shall require a motor vehicle franchisee to
		SB3708	- 55 -	LRB104 20472 SPS 33941 b
1establish average percentage markup by a methodology, or by
2requiring information, that is unduly burdensome or time
3consuming to provide, including, but not limited to, part by
4part or transaction by transaction calculations. A motor
5vehicle franchisee shall not request a change in the average
6percentage markup more than twice in one calendar year.
7    (e) If a motor vehicle franchiser supplies a part or parts
8for use in a repair rendered under a warranty other than by
9sale of that part or parts to the motor vehicle franchisee, the
10motor vehicle franchisee shall be entitled to compensation
11equivalent to the motor vehicle franchisee's average
12percentage markup on the part or parts, as if the part or parts
13had been sold to the motor vehicle franchisee by the motor
14vehicle franchiser. The requirements of this subsection (e)
15shall not apply to entire engine assemblies, propulsion engine
16assemblies, including electric vehicle batteries, and entire
17transmission assemblies. In the case of those assemblies, the
18motor vehicle franchiser shall reimburse the motor vehicle
19franchisee up to and including 30% of what the motor vehicle
20franchisee would have paid the motor vehicle franchiser for
21the assembly if the assembly had not been supplied by the
22franchiser other than by the sale of that assembly to the motor
23vehicle franchisee.
24    (f) The obligations imposed on motor vehicle franchisers
25by this Section shall apply to any parent, subsidiary,
26affiliate, or agent of the motor vehicle franchiser, any
		SB3708	- 56 -	LRB104 20472 SPS 33941 b
1person under common ownership or control, any employee of the
2motor vehicle franchiser, and any person holding 1% or more of
3the shares of any class of securities or other ownership
4interest in the motor vehicle franchiser, if a warranty or
5service or repair plan is issued by that person instead of or
6in addition to one issued by the motor vehicle franchiser.
7    (g) (Blank).
8(Source: P.A. 102-232, eff. 1-1-22; 102-669, eff. 11-16-21.)