§ 20-305.2. Unfair methods of competition.
§ 20‑305.2. Unfairmethods of competition.
(a) It is unlawful forany motor vehicle manufacturer, factory branch, distributor, distributorbranch, or subsidiary thereof, to directly or indirectly through any subsidiaryor affiliated entity, own any ownership interest in, operate, or control anymotor vehicle dealership in this State, provided that this section shall not beconstrued to prohibit:
(1) The operation by amanufacturer, factory branch, distributor, distributor branch, or subsidiarythereof, of a dealership for a temporary period (not to exceed one year) duringthe transition from one owner or operator to another; or
(2) The ownership orcontrol of a dealership by a manufacturer, factory branch, distributor,distributor branch, or subsidiary thereof, while in a bona fide relationshipwith an economically disadvantaged or other independent person, other than amanufacturer, factory branch, distributor, distributor branch, or an agent oraffiliate thereof, who has made a bona fide, unencumbered initial investment ofat least six percent (6%) of the total sales price that is subject to loss inthe dealership and who can reasonably expect to acquire full ownership of thedealership within a reasonable period of time, not to exceed 12 years, and onreasonable terms and conditions; or
(3) The ownership,operation or control of a dealership by a manufacturer, factory branch,distributor, distributor branch, or subsidiary thereof, if such manufacturer,factory branch, distributor, distributor branch, or subsidiary has been engagedin the retail sale of motor vehicles through such dealership for a continuousperiod of three years prior to March 16, 1973, and if the Commissionerdetermines, after a hearing on the matter at the request of any party, thatthere is no independent dealer available in the relevant market area to own andoperate the franchise in a manner consistent with the public interest; or
(4) The ownership,operation, or control of a dealership by a manufacturer, factory branch,distributor, distributor branch, or subsidiary thereof, if the Commissionerdetermines after a hearing on the matter at the request of any party, thatthere is no independent dealer available in the relevant market area to own andoperate the franchise in a manner consistent with the public interest; or
(5) The ownership,operation, or control of any facility (location) of a new motor vehicle dealerin this State at which the dealer sells only new and used motor vehicles with agross weight rating of 8,500 pounds or more, provided that both of thefollowing conditions have been met:
a. The facility islocated within 35 miles of manufacturing or assembling facilities existing asof January 1, 1999, and is owned or operated by the manufacturer, manufacturingbranch, distributor, distributor branch, or any affiliate or subsidiary thereofwhich assembles, manufactures, or distributes new motor vehicles with a grossweight rating of 8,500 pounds or more by such dealer at said location; and
b. The facility islocated in the largest Standard Metropolitan Statistical Area (SMSA) in theState; or
(6) As to any line makeof motor vehicle for which there is in aggregate no more than 13 franchised newmotor vehicle dealers (locations) licensed and in operation within the State asof January 1, 1999, the ownership, operation, or control of one or more newmotor vehicle dealership trading solely in such line make of vehicle by themanufacturer, factory branch, distributor, distributor branch, or subsidiary oraffiliate thereof, provided however, that all of the following conditions aremet:
a. The manufacturer,factory branch, distributor, distributor branch, or subsidiary or affiliatethereof does not own directly or indirectly, in aggregate, in excess of forty‑fivepercent (45%) interest in the dealership;
b. At the time themanufacturer, factory branch, distributor, distributor branch, or subsidiary oraffiliate thereof first acquires ownership or assumes operation or control withrespect to any such dealership, the distance between the dealership thus owned,operated, or controlled and the nearest other new motor vehicle dealershiptrading in the same line make of vehicle, is no less than 35 miles;
c. All themanufacturer's franchise agreements confer rights on the dealer of the linemake to develop and operate within a defined geographic territory or area, asmany dealership facilities as the dealer and manufacturer shall agree areappropriate; and
d. That as of July 1,1999, not fewer than half of the dealers of the line make within the State ownand operate two or more dealership facilities in the geographic territory orarea covered by the franchise agreement with the manufacturer.
(7) The ownership,operation, or control of a dealership that sells primarily recreationalvehicles as defined in G.S. 20‑4.01 by a manufacturer, factory branch,distributor, or distributor branch, or subsidiary thereof, if the manufacturer,factory branch, distributor, or distributor branch, or subsidiary thereof,owned, operated, or controlled the dealership as of October 1, 2001.
(b) Subsection (a) ofthis section does not apply to manufacturers or distributors of trailers orsemitrailers that are not recreational vehicles as defined in G.S. 20‑4.01.
(c) For purposes ofsubsection (d) of this section, the following definitions apply:
(1) Former Franchisee. A new motor vehicle dealer, as defined in G.S. 20‑286(13), that hasentered into a franchise, as defined in G.S. 20‑286(8a) with apredecessor manufacturer and that has either:
a. Entered into atermination agreement or deferred termination agreement with a predecessor orsuccessor manufacturer related to such franchise; or
b. Has had suchfranchise canceled, terminated, nonrenewed, noncontinued, rejected, nonassumed,or otherwise ended.
(2) Relevant marketarea. The area within a 10‑, 15‑, or 20‑mile radius aroundthe site of the previous franchisee's dealership facility, as determined in thesame manner that the relevant market area is determined under G.S. 20‑286(13b)when a manufacturer is seeking to establish an additional new motor vehicledealer.
(3) Successormanufacturer. Any motor vehicle manufacturer, as defined in G.S. 20‑286(8e),that, on or after January 1, 2009, acquires, succeeds to, or assumes any partof the business of another manufacturer, referred to as the "predecessormanufacturer," as the result of any of the following:
a. A change inownership, operation, or control of the predecessor manufacturer by sale ortransfer of assets, corporate stock or other equity interest, assignment, merger,consolidation, combination, joint venture, redemption, court‑approvedsale, operation of law or otherwise.
b. The termination,suspension, or cessation of a part or all of the business operations of thepredecessor manufacturer.
c. The discontinuanceof the sale of the product line.
d. A change indistribution system by the predecessor manufacturer, whether through a changein distributor or the predecessor manufacturer's decision to cease conductingbusiness through a distributor altogether.
(d) For a period offour years from the date that a successor manufacturer acquires, succeeds to,or assumes any part of the business of a predecessor manufacturer, it shall beunlawful for such successor manufacturer to enter into a same line makefranchise with any person, as defined in G.S. 20‑4.01(28), or to permitthe relocation of any existing same line make franchise, for a line make of thepredecessor manufacturer that would be located or relocated within the relevantmarket area of a former franchisee who owned or leased a dealership facility inthat relevant market area without first offering the additional or relocatedfranchise to the former franchisee, or the designated successor of such formerfranchisee in the event the former franchisee is deceased or disabled, at nocost and without any requirements or restrictions other than those imposedgenerally on the manufacturer's other franchisees at that time, unless one ofthe following applies:
(1) As a result of theformer franchisee's cancellation, termination, noncontinuance, or nonrenewal ofthe franchise, the predecessor manufacturer had consolidated the line make withanother of its line makes for which the predecessor manufacturer had afranchisee with a then‑existing dealership facility located within thatrelevant market area.
(2) The successormanufacturer has paid the former franchisee, or the designated successor ofsuch former franchisee in the event the former franchisee is deceased ordisabled, the fair market value of the former franchisee's franchise calculatedas prescribed in G.S. 20‑305(6)d.3.
(3) The successormanufacturer proves that the former franchisee, or the designated successor ofsuch former franchisee in the event the former franchisee is deceased ordisabled, by reason of lack of training, lack of prior experience, poor pastperformance, lack of financial ability, or poor character, is unfit to own ormanage the dealership. A successor manufacturer who seeks to assert that aformer franchisee is unfit to own or manage the dealership must file a petitionseeking a hearing on this issue before the Commissioner and shall have theburden of proving lack of fitness at such hearing. The Commissioner shall tryto conduct the hearing and render a final determination within 120 days afterthe manufacturer's petition has been filed. No successor dealer, other than theformer franchisee, may be appointed or franchised by the successor manufacturerwithin the relevant market area until the Commissioner has held a hearing andrendered a determination on the issue of the fitness of the previous franchiseeto own or manage the dealership. (1973, c. 88, s. 3; 1983, c. 704, ss. 14, 15; 1999‑335,s. 5; 2001‑510, s. 3; 2002‑72, ss. 19(d), 19(e); 2003‑416, s.11; 2009‑496, s. 2.)