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<section article="gtr" article_name="Transportation" number="15-207" title_number="15" title_name="Vehicle Laws -- Licensing of Businesses and Occupations" subtitle_number="2" subtitle_name="Manufacturers, Distributors, and Factory Branches">
  <level label="a">
    <level label="1">
      <text>In this section the following words have the meanings indicated.</text>
    </level>
    <level label="2">
      <level label="i">
        <text>“Coerce” means to compel or attempt to compel by threat of harm, breach of contract, or other adverse action or consequences, including the loss of any incentive or other benefit made available to other dealers of the same line make in the State.</text>
      </level>
      <level label="ii">
        <text>“Coerce” includes to act in a manner that violates § 15–206.1 of this subtitle.</text>
      </level>
      <level label="iii">
        <text>“Coerce” does not include to argue, urge, recommend, or persuade.</text>
      </level>
    </level>
    <level label="3">
      <text>“Require” means to impose upon a dealer a provision not required by law or previously agreed to by a dealer in a franchise agreement, excluding business decisions made to comply with the requirements of this title by a manufacturer, distributor, or factory branch which are uniformly applied to all Maryland dealers in new vehicles of the manufacturer, distributor, or factory branch.</text>
    </level>
  </level>
  <level label="b">
    <text>A manufacturer, distributor, or factory branch, whether directly or through an agent, employee, affiliate, or representative, may not coerce any dealer to make any agreement with the manufacturer, distributor, or factory branch or their agent, employee, affiliate, or representative.</text>
  </level>
  <level label="c">
    <text>A manufacturer, distributor, or factory branch, whether directly or through an agent, employee, affiliate, or representative, may not coerce any dealer to order or accept delivery of any vehicle, any equipment, parts, or accessories for a vehicle, or any other commodity that is not required by law or by the dealer’s franchise or that was not ordered voluntarily by the dealer.</text>
  </level>
  <level label="d">
    <text>A manufacturer, distributor, or factory branch, whether directly or through an agent, employee, affiliate, or representative, may not require or coerce a dealer, by franchise agreement or otherwise, or as a condition to the renewal or continuation of a franchise agreement, to:</text>
    <level label="1">
      <text>Exclude from the use of the dealer’s facilities a dealership for which the dealer has a franchise agreement to utilize the facilities; or</text>
    </level>
    <level label="2">
      <text>Materially change the dealer’s facilities or method of conducting business if the change would impose substantial financial hardship on the business of the dealer.</text>
    </level>
  </level>
  <level label="e">
    <level label="1">
      <text>The provisions of this subsection apply notwithstanding the terms of any franchise agreement or agreement related to a franchise.</text>
    </level>
    <level label="2">
      <text>A manufacturer, distributor, or factory branch, whether directly or through an agent, employee, affiliate, or representative, may not require or coerce a dealer to adhere to performance standards that are not applied uniformly to other similarly situated dealers.</text>
    </level>
    <level label="3">
      <level label="i">
        <text>Whether or not uniformly applied to other similarly situated dealers, an assigned market area or a performance standard, sales objective, or program for measuring dealership performance that may have a material effect on a dealer, including the dealer’s right to a benefit or payment under any incentive or reimbursement program, and the application of the standard, sales objective, or program by a manufacturer, distributor, or factory branch shall:</text>
        <level label="1">
          <text>Be fair, reasonable, and equitable;</text>
        </level>
        <level label="2">
          <text>Be based on accurate information; and</text>
        </level>
        <level label="3">
          <text>Include considerations of the demographic characteristics and consumer preferences of the population in the dealer’s assigned market area, including:</text>
        </level>
        <level label="A">
          <text>Car and truck preferences of consumers; and</text>
        </level>
        <level label="B">
          <text>Geographic characteristics, such as natural boundaries, road conditions, and terrain, that affect car and truck shopping patterns.</text>
        </level>
      </level>
      <level label="ii">
        <text>A dealer that claims that the assignment of a market area or application of a performance standard, sales objective, or program for measuring dealership performance is unfair or unreasonable due to the manufacturer, distributor, or factory branch failing to reasonably consider demographic characteristics of the population in the dealer’s assigned market area, including car and truck preferences of consumers, or due to the geographic characteristics, such as natural boundaries, road conditions, and terrain, that affect car and truck shopping patterns in the dealer’s assigned marketing area, may file a claim in a court of competent jurisdiction to determine whether the design of the assigned market area or the application of the performance standard, sales objective, or program is unfair or unreasonable under this paragraph.</text>
      </level>
      <level label="iii">
        <text>A manufacturer, distributor, or factory branch has the burden of proving that the design of the assigned market area, or the performance standard, sales objective, or program for measuring dealership performance is fair and reasonable under this paragraph.</text>
      </level>
    </level>
    <level label="4">
      <level label="i">
        <text>If the performance standard is based on a survey, it must be shown that:</text>
        <level label="1">
          <text>The survey was designed with experts;</text>
        </level>
        <level label="2">
          <text>The proper universe was examined;</text>
        </level>
        <level label="3">
          <text>A representative sample was chosen; and</text>
        </level>
        <level label="4">
          <text>The data was accurately reported.</text>
        </level>
      </level>
      <level label="ii">
        <text>The manufacturer, distributor, or factory branch shall establish the objectivity of the survey process and provide this information to any dealer of the same line make covered by the survey on request.</text>
      </level>
    </level>
  </level>
  <level label="f">
    <text>A franchise agreement or other contract offered to a dealer by a manufacturer, distributor, or factory branch may not contain any provision requiring a dealer to pay the attorney’s fees of the manufacturer, distributor, or factory branch related to disputes involving the franchise.</text>
  </level>
  <level label="g">
    <level label="1">
      <level label="i">
        <text>If the dealer is an entity other than an individual, the dealer shall designate an individual to represent the dealer to do business with the manufacturer, distributor, or factory branch.</text>
      </level>
      <level label="ii">
        <text>Approval of the individual may not be withheld by the manufacturer, distributor, or factory branch unless the individual is unfit due to lack of good moral character or fails to meet reasonable general business experience requirements.</text>
      </level>
    </level>
    <level label="2">
      <text>A dealer shall have a reasonable amount of time to:</text>
      <level label="i">
        <text>Designate a representative or a successor if a change is required for any reason; and</text>
      </level>
      <level label="ii">
        <text>Obtain approval of the representative or successor designated under item (i) of this paragraph, including time for a hearing, in the event of any objection by the manufacturer, distributor, or factory branch.</text>
      </level>
    </level>
    <level label="3">
      <text>At a hearing resulting from an objection to the approval of the designated individual, the manufacturer, distributor, or factory branch has the burden of proving that the designated individual is not of good moral character or fails to meet reasonable general business experience requirements.</text>
    </level>
  </level>
  <level label="h">
    <level label="1">
      <level label="i">
        <text>Any consumer rebates, dealer incentives, price or interest rate reductions, or finance terms that a manufacturer, distributor, or factory branch offers or advertises, or allows its dealers to offer or advertise, shall be offered to all dealers of the same line make.</text>
      </level>
      <level label="ii">
        <text>Any manufacturer, distributor, or factory branch that denies the benefit of any consumer rebates, dealer incentives, price or interest rate reductions, or finance terms to a dealer on the basis that the dealer failed to comply with performance standards has the burden of proving that the performance standards comply with the provisions of this section.</text>
      </level>
    </level>
    <level label="2">
      <text>Unless a dealer violates a State or local law intended to protect the public, a manufacturer, distributor, or factory branch may not:</text>
      <level label="i">
        <text>Require a dealer to alter or replace an existing dealership facility; or</text>
      </level>
      <level label="ii">
        <text>Deny, or threaten to deny, any benefit generally available to all dealers for a dealer’s failure to alter or replace an existing dealership facility.</text>
      </level>
    </level>
    <level label="3">
      <text>Unless a dealer violates § 15–313(a) or (b) of this title or a State or local law intended to protect the public, a manufacturer, distributor, or factory branch may not take an adverse action against a dealer for disclosing on its website that the advertised price of a vehicle is the manufacturer’s minimum allowable advertised price and that the dealer may offer a lower price for the vehicle.</text>
    </level>
    <level label="4">
      <text>A manufacturer, distributor, or factory branch may not reduce the price of a motor vehicle charged to a dealer or provide different financing terms to a dealer in exchange for the dealer’s agreement to:</text>
      <level label="i">
        <text>Maintain an exclusive sales or service facility;</text>
      </level>
      <level label="ii">
        <text>Build or alter a sales or service facility; or</text>
      </level>
      <level label="iii">
        <text>Participate in a floor plan or other financing arrangement.</text>
      </level>
    </level>
  </level>
  <level label="i">
    <text>A manufacturer, distributor, or factory branch may offer rebates, cash incentives, or other promotional items for the sale of a vehicle by its dealers if:</text>
    <level label="1">
      <text>The same rebate, cash incentive, or promotion is offered to all of its dealers of the same line make; and</text>
    </level>
    <level label="2">
      <text>Any rebate, cash incentive, or promotion that is based on the sale of an individual vehicle is not increased for meeting a performance standard unless the standard is reasonable considering all existing circumstances.</text>
    </level>
  </level>
  <level label="j">
    <text>A manufacturer, distributor, or factory branch may not discriminate among its dealers in any program that provides assistance to its dealers, including Internet listings, sales leads, warranty policy adjustments, marketing programs, and dealer recognition programs.</text>
  </level>
  <level label="k">
    <level label="1">
      <text>This subsection does not apply to:</text>
      <level label="i">
        <text>The purchase or procurement of:</text>
        <level label="1">
          <text>Moveable displays;</text>
        </level>
        <level label="2">
          <text>Brochures or other promotional materials;</text>
        </level>
        <level label="3">
          <text>Special tools and training as required by the manufacturer;</text>
        </level>
        <level label="4">
          <text>Parts for repairs made under warranty obligations of a manufacturer, distributor, or factory branch; or</text>
        </level>
        <level label="5">
          <text>Any goods or services for which a manufacturer, a distributor, a factory branch, or an affiliate provides a credit, stipend, payment, or reimbursement to the dealer that covers all or a substantial portion of the dealer’s program costs;</text>
        </level>
      </level>
      <level label="ii">
        <text>Optional programs;</text>
      </level>
      <level label="iii">
        <text>A program, or the renewal or modification of a program, in existence on October 1, 2014; or</text>
      </level>
      <level label="iv">
        <text>An agreement between the manufacturer, distributor, factory branch, or affiliate and the dealer that is directly related to the dealer’s completion of a program if separate and valuable consideration has been offered to the dealer and accepted.</text>
      </level>
    </level>
    <level label="2">
      <level label="i">
        <text>Subject to subparagraph (ii) of this paragraph, a manufacturer, distributor, factory branch, or one of its affiliates may not, directly or through an agent, an employee, an affiliate, or a representative, require or coerce by agreement, program, or incentive provision, a dealer to purchase goods or services from a vendor that is selected, identified, or designated by the manufacturer, distributor, factory branch, or one of its affiliates.</text>
      </level>
      <level label="ii">
        <text>A manufacturer, distributor, factory branch, or one of its affiliates may offer a dealer the option to obtain goods or services under this subsection of substantially similar quality and design from a vendor chosen by the dealer subject to the advanced approval of the manufacturer, distributor, factory branch, or one of its affiliates.</text>
      </level>
    </level>
    <level label="3">
      <text>A manufacturer, distributor, factory branch, or one of its affiliates may not unreasonably withhold the approval required under paragraph (2) of this subsection.</text>
    </level>
    <level label="4">
      <text>Nothing in this subsection may be construed to allow a dealer or vendor to:</text>
      <level label="i">
        <text>Directly or indirectly eliminate or impair in any way a manufacturer’s intellectual property, trademark, or trade dress rights; or</text>
      </level>
      <level label="ii">
        <text>Erect or maintain signs that do not conform to the intellectual property usage guidelines of the manufacturer, distributor, factory branch, or one of its affiliates.</text>
      </level>
    </level>
    <level label="5">
      <level label="i">
        <text>A manufacturer, distributor, factory branch, or one of its affiliates may not penalize a dealer for failure to participate in an optional program.</text>
      </level>
      <level label="ii">
        <text>Withholding the benefits of an optional program in which the dealer failed to participate may not be construed to be a penalty imposed by the manufacturer, distributor, factory branch, or affiliate.</text>
      </level>
    </level>
  </level>
</section>
