Senate Bill 2836

AN ACT TO AMEND SECTION 63-17-75, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT NO MOTOR VEHICLE MANUFACTURER, FACTORY BRANCH, DISTRIBUTOR, DISTRIBUTOR BRANCH OR SUBSIDIARY THEREOF IS ELIGIBLE, THROUGH ANY PARENT, SUBSIDIARY OR AFFILIATED ENTITY, TO DIRECTLY OWN ANY OWNERSHIP INTEREST IN, OPERATE OR CONTROL ANY MOTOR VEHICLE DEALER OR DEALERSHIP FOR THE SAME TYPE OR CLASSIFICATION OF MOTOR VEHICLE THAT IT MANUFACTURES OR DISTRIBUTES, TO APPLY FOR A MOTOR VEHICLE DEALERS LICENSE OR TO BE LICENSED AS A NEW MOTOR VEHICLE DEALER IN THIS STATE; TO AMEND SECTION 63-17-109, MISSISSIPPI CODE OF 1972, TO PROVIDE CERTAIN EXCEPTIONS OF THE APPLICATION OF THE SECTION AND THE CHAPTER; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 63-17-75, Mississippi Code of 1972, is amended as follows:

63-17-75. Within ninety (90) days after July 1, 1970, all persons who on July 1, 1970, are engaged in a business or occupation for which a license is required under the Mississippi Motor Vehicle Commission Law shall make application on forms prescribed by the commission for their respective licenses. All such persons shall be permitted, without a license, to continue to engage in the business or occupation for which a license is applied for until the license is either granted or, in case it is denied, until the applicant has exhausted or has had an opportunity to exhaust all of his remedies under Section 63-17-99. No person not engaged in a business or occupation requiring such a license on July 1, 1970, shall be permitted to engage in such business or occupation until he shall have first obtained a license to engage in such business or occupation.

Applications for licenses shall be verified by the oath or affirmation of the applicants and shall be on forms prescribed by the commission and furnished to such applicants. Applications shall contain such information as the commission deems necessary to enable it to fully determine the qualifications and eligibility of the several applicants to receive the license or licenses applied for. The commission shall require that there be set forth in each application information relating to the applicant's financial standing, the applicant's business integrity, whether the applicant has an established place of business and is primarily engaged in the pursuit, avocation or business for which a license or licenses is applied for, and whether the applicant is able to properly conduct the business for which a license or licenses is applied for, and such other pertinent information consistent with the safeguarding of the public interest and public welfare. Applications for license as a motor vehicle dealer shall, in addition to the foregoing, be accompanied by the filing with the commission of a bona fide contract or franchise then in effect between the applicant and a manufacturer, distributor or wholesaler of the new motor vehicle or vehicles proposed to be dealt in, unless such contract or franchise has already been filed with the commission in connection with a previous application made by such applicant, in which event the applicant shall, in lieu of again filing the contract or franchise, identify the contract or franchise by appropriate reference and file all revisions and additions, if any, which have been made to said contract or franchise. The applicant must furnish satisfactory evidence that he or it maintains adequate space in the building or structure wherein his or its established business is conducted for the display of new motor vehicles, or he will have such facilities within a reasonable time after receiving a license, and that he or it has or will have adequate facilities in said building or structure for the repair and servicing of motor vehicles and the storage of new parts and accessories for same. However, the failure to furnish the evidence called for in the preceding sentence shall not constitute sufficient cause for denying a license to any motor vehicle dealer who on July 1, 1970, was an enfranchised new motor vehicle dealer in this state of a manufacturer, distributor or wholesaler of new motor vehicles and who continued to be such a dealer from such date until application was made for a license as a motor vehicle dealer.

New applications for licenses as a new, used or wholesale motor vehicle dealer shall, in addition to the foregoing, be accompanied by the filing with the commission of a corporate surety bond in the penal sum of Twenty-five Thousand Dollars ($25,000.00) on a bond form approved by the commission. However, an applicant for licenses at multiple locations may choose to provide a corporate surety bond in the penal sum of One Hundred Thousand Dollars ($100,000.00) covering all licensed locations of the same capacity in lieu of separate bonds for each location.

The bond shall be in effect upon the applicant being licensed and shall be conditioned upon his complying with the provisions of the Mississippi Motor Vehicle Commission Law. The bond shall be an indemnity for any loss sustained by any person by reason of the acts of the person bonded when those acts constitute grounds for the suspension or revocation of license. The bond shall be executed in the name of the State of Mississippi for the benefit of any aggrieved party. The aggregate liability of the surety for any claimants, regardless of the number of years this bond is in force or has been in effect, shall not exceed the amount of the bond. The proceeds of the bond shall be paid upon receipt by the commission of a final judgment from a Mississippi court of competent jurisdiction against the principal and in favor of an aggrieved party.

New, used and wholesale motor vehicle dealers shall be required to maintain motor vehicle liability insurance providing blanket coverage on vehicles operated on the public streets and highways of this state, including vehicles in dealership inventory unless the motor vehicle dealer's inventory does not have a motor. Evidence of liability insurance for business and inventory vehicles shall be filed with the application for license, and the application for license shall be denied if proof of liability insurance satisfactory to the Department of Revenue is not provided.

Except as expressly allowed by Section 63-17-109, no motor vehicle manufacturer, factory branch, distributor, distributor branch or subsidiary thereof is eligible, through any parent, subsidiary or affiliated entity, whether or not such motor vehicle manufacturer, factory branch, distributor, distributor branch or subsidiary thereof has entered into a franchise with any person or entity in this state, to directly:

(a) Own any ownership interest in, operate or control any motor vehicle dealer or dealership in this state for the same type or classification of motor vehicle that it manufactures or distributes;

(b) Apply for a motor vehicle dealers license; or

SECTION 2. Section 63-17-109, Mississippi Code of 1972, is amended as follows:

63-17-109. (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:

(a) 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.

(b) 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:

(a) 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;

(b) 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;

(d) 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) (a) 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.

(b) 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.

(6) Neither Section 63-17-75 nor this section shall be construed to prohibit any of the following:

(a) The ownership, operation or control by a manufacturer, factory branch, distributor branch or subsidiary thereof, of a dealership for a temporary period not to exceed one (1) year, during the transition from one licensed motor vehicle dealer to another. The Motor Vehicle Commission may extend the temporary ownership, operation or control period upon a showing of good cause by the manufacturer, factory branch, distributor, distributor branch or subsidiary thereof;

(b) The ownership or control of a dealership by a manufacturer, factory branch, distributor branch or subsidiary thereof, while in a bona fide relationship with an independent person other than a manufacturer, factory branch, distributor branch or an agent or affiliate thereof, who has made a significant, bona fide, unencumbered initial investment in the dealership that is subject to loss and who can reasonably expect to acquire full ownership of the dealership within a reasonable time and on reasonable terms and conditions; or

(c) The ownership, operation or control of not more than one (1) motor vehicle dealership located within this state by a manufacturer that manufactures and sells only motor vehicles that are plug-in electric vehicles that do not rely on any nonelectric source of power in all modes of operation, provided that the dealership has been continuously licensed since August 1, 2021, and provided that the ownership or controlling interest in the dealership is not transferred, sold or conveyed to another person required to be licensed under this title.

SECTION 3. This act shall take effect and be in force from and after July 1, 2022.