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Section 63-17-109

§ 63-17-109. Right of first refusal.

  1. In the event of a proposed sale or transfer of a dealership and the franchise agreement for the dealership contains a right of first refusal in favor of the manufacturer or distributor, notwithstanding the terms of the franchise agreement, the manufacturer or distributor shall be permitted to exercise a right of first refusal to acquire the dealership only if all of the following requirements are met:
    1. The manufacturer or distributor sends by certified mail, return receipt requested, or any other reliable means of communication, notice of its intent to exercise its right of first refusal within sixty (60) days of receipt of the executed contract for the proposed sale or transfer and completed application and related documents reasonably requested by the manufacturer or distributor. The manufacturer or distributor shall provide the application and notice of other requirements within fifteen (15) days of request. In no event shall the manufacturer or distributor exercise its right of first refusal more than one hundred twenty (120) days after receipt of the executed contract. The manufacturer or distributor and the applicant shall act in good faith to provide the required information in a timely and expeditious manner.
    2. The exercise of the right of first refusal will result in the motor vehicle dealer receiving consideration, terms and conditions that are either the same as or greater than that for which such dealer has contracted for in connection with the proposed transaction.
  2. The manufacturer's or distributor's right of first refusal shall not apply to a transaction involving one (1) of the following:
    1. A designated family member or members, including the spouse, child or grandchild, spouse of a child or grandchild, brother, sister or parent of the dealer-operator, or one or more motor vehicle dealer owners;
    2. A manager employed by the motor vehicle dealer in the dealership during the previous five (5) years that is otherwise qualified as a dealer-operator;
    3. A partnership or corporation controlled by any of the family members of the dealer-operator;
    4. A trust arrangement established or to be established for the purpose of allowing the new motor vehicle dealer to continue to qualify as such pursuant to the manufacturer's or distributor's standards, or provides for the succession of the franchise agreement to designated family members or qualified management in the event of the death or incapacity of the dealer-operator or its principal owner or owners.
  3. The manufacturer or distributor shall pay the reasonable expenses, including attorneys' fees which do not exceed the usual, customary and reasonable fees charged for similar work done for other clients, incurred by the proposed owner prior to the exercise of the right of first refusal in negotiating and implementing the contract for the proposed sale of the dealership. The expenses and attorneys' fees shall be paid to the proposed new owner at the time of the closing of the sale at which the manufacturer or distributor exercises its right of first refusal.
    • No payment of expenses and attorneys' fees shall be required if the person claiming reimbursement has not submitted or caused to be submitted an accounting of those expenses within thirty (30) days after the receipt of the manufacturer's or distributor's written request for the accounting. A manufacturer or distributor may request the accounting before exercising its right of first refusal.
  4. If the selling dealer discloses the manufacturer's right of first refusal to the proposed owner in writing, the motor vehicle dealer shall not have any liability to any person as a result of a manufacturer or distributor exercising its right of first refusal and the manufacturer or distributor shall assume the defense of the selling motor vehicle dealer for any claims by the proposed owner arising from the exercise of the right of first refusal.
  5. If the manufacturer or distributor does not exercise its right of first refusal within the time period set forth in subsection (1) (a), the manufacturer or distributor shall act upon the proposed sale of the franchise promptly and in good faith but in no event more than one hundred twenty (120) days after receipt of the completed application and related documents reasonably requested by the manufacturer or distributor

SOURCES: Laws, 2000, ch. 418, § 2; Laws, 2006, ch. 432, § 5, eff from and after July 1, 2006.