28-4460

28-4460. Factories; competition or unfair
discrimination prohibited; definitions

A. A factory shall not directly or indirectly compete with or unfairly discriminate
among its dealers.

B. Competing with or unfair discrimination includes any one of the following:

1. The factory having an ownership interest or franchise interest in, or operating
or acting in the capacity of, a new motor vehicle dealer or a used motor vehicle dealer,
except that:

(a) A factory is not prohibited from owning or operating as a new motor vehicle
dealer for a temporary period if either of the following apply:

(i) The temporary period is not more than twelve months during the transition from
one dealer to another dealer if the dealership is for sale and is being actively marketed
by the factory at a bona fide reasonable price and on reasonable terms and conditions to
any independent qualified buyer.

(ii) The factory submits evidence that disposition of its interest will result in
financial loss to the factory or dealership.

The temporary period may be extended in one year increments if either of the requirements
of this subdivision are met.

(b) A factory is not prohibited from temporarily owning a dealership while in a
bona fide relationship with a qualified person. A bona fide relationship with a person
who is qualified requires that:

(i) The total sales price of the dealership is not less than an amount that is
consistent with standard business practices.

(ii) The independent qualified person make a substantial unencumbered bona fide
initial investment in the dealership that is reasonable and consistent with standard
business practices.

(iii) The bona fide initial investment of the qualified person is subject to
potential loss. The qualified person's percentage share of any potential dealership
losses shall not be less than the person's percentage share of ownership of the
dealership at the time of the loss.

(iv) The qualified person buy substantial portions of the factory's remaining
ownership interest in substantial regular periodic payments throughout the acquisition
period.

(v) The qualified person can expect to acquire and retain full and complete
ownership of the dealership within a reasonable period of time that is not longer than
ten years and on reasonable terms and conditions that are consistent with standard
business practices. The ten year acquisition period may be extended for good cause shown
by the qualified person.

(vi) During the acquisition period if the qualified person is paid a management
fee, the management fee shall be reasonable and consistent with standard business
practices for an individual managing a franchise of similar size and volume of sales and
leases of vehicles or products.

(c) A factory is not prohibited from owning on a permanent basis a minority
interest in a dealership if all of the following conditions are satisfied:

(i) The interest owned by the factory is not more than forty-five per cent or the
percentage interest actually owned by the factory on January 1, 2000, whichever is less.

(ii) Any dealership in which the factory owns the interest shall not be less than
seventy-five miles from the nearest dealership of the same line-make in which the factory
does not own the interest.

(iii) All dealerships in which the factory owns the interest shall not sell or
lease more than one of the line-makes of new motor vehicles and parts manufactured by the
factory.

(iv) All dealerships in which the factory owns the interest shall sell or lease the
same line-make of new motor vehicles and parts manufactured by the factory. The
dealerships may also sell or lease new motor vehicles and parts of a line-make
manufactured by a factory that does not have an ownership interest in the dealership.

(v) The factory or an entity in which the factory has the interest must have been
licensed in this state as a new motor vehicle dealer on January 1, 2000 selling the
line-make of new motor vehicle manufactured by the factory.

(vi) The factory must have owned the interest in at least one dealership selling
the line-make manufactured by the factory on January 1, 2000.

(vii) The factory or an entity in which the factory has the interest shall not sell
any line-make of new motor vehicle that it was not selling in this state before January
1, 2000.

(viii) All automotive related services and financing related to the line-make or
the factory owning the interest shall be sold or provided only to owners of vehicles of
the line-make, regardless of where the vehicle was purchased, or to any purchasers of any
new or used motor vehicles purchased from a dealership in which the factory has an
interest. This item shall not preclude that dealership from selling or providing any
nonwarranty repairs or maintenance on motor vehicles of any line-make or warranty repairs
or maintenance of any line-make of new motor vehicles sold by the dealership and not
manufactured by the factory.

(ix) All used motor vehicles of a line-make manufactured by the factory, other than
the line-make that the dealership sells or leases new, acquired by the dealership,
directly or indirectly from the factory, shall be acquired only at wholesale auction open
to dealers of all line-makes manufactured by the factory.

2. The factory selling, leasing or providing, or offering to sell, lease or
provide, a vehicle or product, service or financing to any retail consumer or lead. This
paragraph does not:

(a) Prohibit a factory from advertising to sell, lease or provide a vehicle or
product, service or financing through its dealers.

(b) Prohibit a factory from selling, leasing or providing or offering to sell,
lease or provide a vehicle or product, service or financing through its dealers.

(d) Prohibit a factory from selling, leasing or providing A VEHICLE or
PRODUCT, SERVICE or financing to an agency of the federal government.

(e) Prohibit a factory from selling or leasing a vehicle or product, service or
financing through its dealers to retail consumers who qualify for any reasonable factory
sponsored factory employee, factory retiree or factory vendor new vehicle purchase
program or any other reasonable similar factory related new vehicle purchase program.

(f) Prohibit a factory from providing financing to retail consumers through any
used motor vehicle dealer or new motor vehicle dealer of any line-make.

(g) Prohibit a factory from providing a loan directly to a person or entity if the
loan is for a purpose unrelated to the ownership or leasing of a new motor vehicle or a
used motor vehicle not for resale.

(h) Prohibit a factory from providing loans directly to used motor vehicle dealers
or new motor vehicle dealers of any line-make for any purpose, including working capital,
real estate, construction or motor vehicle or parts inventories.

(i) Prohibit a factory from arranging or providing emergency roadside service.

(j) Prohibit a factory from offering factory sponsored extended service contracts
to purchasers of new motor vehicles, provided that:

(i) Such offers shall not take place less than ninety days after the date the
retail consumer takes delivery of the new motor vehicle.

(ii) Such offers are made to retail consumers only at the manufacturer's suggested
retail price.

(k) Prohibit a factory from selling a lease vehicle to the original lessee pursuant
to a purchase option set forth in the lease. Such sale may be a credit sale with the
factory as the credit seller and may include the direct sale of extended service
contracts at the manufacturer's suggested retail price.

(l) Prohibit a factory, at the request of a motor vehicle lessee, from extending a
lease of a motor vehicle.

(m) Prohibit a factory from offering and approving a retail consumer credit
application for the financing or leasing of a motor vehicle provided that both of the
following apply:

(i) The final transaction takes place through a licensed motor vehicle dealer.

(ii) The factory does not establish or quote any interest rate, finance rate or
lease rate in association with a credit application.

(n) Prohibit a factory from renewing or charging any subscription or connection
fees for any in-vehicle electronic wireless communication, information or entertainment
services.

3. The factory controlling any aspect of the final amount charged, the final sales
price or the final lease price for any vehicle or product, trade-in or service offered to
retail consumers in a dealer's area of responsibility without the written consent of the
dealer. The dealer's consent may be withdrawn on forty-five days' notice without
retribution or the threat of retribution from the factory. This paragraph does not
prohibit a factory from:

(a) Changing dealer cost or establishing any of the following:

(i) Manufacturer's suggested retail price pursuant to 15 United States Code section
1232.

(ii) Factory's suggested retail price for parts.

(iii) Factory's suggested retail price for service.

(b) Establishing from time to time reasonable sales, lease or financing promotions
of reasonable and limited duration, provided that programs up to a year are presumed to
be of reasonable and limited duration.

(d) Establishing the terms of any vehicle warranty.

(e) Establishing reasonable sales, lease or financing terms through its dealers to
retail consumers who qualify for any reasonable factory sponsored factory employee,
factory retiree or factory vendor new vehicle purchase program or any other reasonable
similar factory related new vehicle purchase program.

(f) Linking the factory's internet site to internet sites maintained by its dealers
or third parties, or to internet sites maintained jointly by the factory and its dealers
and made available to all of the factory's dealers of the same line-make, provided that
the factory shall not dictate, limit, establish, set or endorse as a basis for a retail
transaction any price other than the manufacturer's suggested retail price.

(g) Establishing the price at which the lessee of a motor vehicle may purchase or
re-lease that motor vehicle on expiration or termination of that lessee's lease.

(h) Operating or facilitating a program or system through which individual dealers
may provide quotes or offers to individual consumers.

4. The factory refusing to unconditionally offer and provide to its same line-make
dealers all models, series and editions of new motor vehicles that are publicly
advertised for that line-make in Arizona. The failure to deliver any new motor vehicles
shall not be considered a violation of this paragraph if the failure is caused by a lack
of manufacturing capacity, labor strike, shortage of materials or trade embargo or any
other condition over which the factory has no control. A factory may require a dealer to
purchase reasonable quantities of advertising materials, purchase reasonable quantities
of special tools required to properly service a motor vehicle and undertake reasonable
salesperson or service person training related to the motor vehicle as a condition of
receiving a motor vehicle. This paragraph does not:

(a) Apply to recreational vehicle manufacturers.

(b) Prohibit a factory from providing monetary, financial or optional equipment
incentives to fleet purchasers for new motor vehicles not for resale.

5. The factory denying to any dealer any price reduction, rebate, incentive payment
or similar pricing device relating to the sale or offer to sell a new motor vehicle to a
dealer, pursuant to a program that discriminates among dealers of the same line-make in
Arizona, when the dealer cannot qualify or receive the benefits of the program for
reasons other than the dealer's failure to use reasonable effort to qualify and the terms
of the program are such that a failure to qualify or receive its benefits would
constitute the constructive termination of the dealer.

6. The factory failing to provide or direct a lead relating to a particular
line-make either:

(a) To the dealer with whom the lead has a preexisting relationship.

(b) To the dealer of the same line-make that is located closest to where the lead
resides, or to the local business address if the lead is a business.

(c) To the dealer of the same line-make in whose assigned area of responsibility
the lead resides, or the local business address if the lead is a business.

(d) According to the lead's voluntary preference.

C. Under subsection B, paragraph 6:

1. The factory need not provide or direct a lead to a dealer who does not sell the
vehicle or product, service or financing in which the lead expresses an interest.

2. The factory is responsible only for providing to the dealer information that it
possesses concerning the lead.

3. The factory is not precluded from providing or directing leads to any other
dealer of the same line-make.

4. All leads shall be provided or directed in a fair, nondiscriminatory, equitable
and timely manner to dealers and, except as provided in subsection D, without charging a
fee for those leads.

D. Subsection B, paragraph 6 does not apply to any factory sponsored internet-based
program specifically designed to provide retail consumers with internet access to dealer
quotations on vehicles, products, financing or services, provided that:

1. Fees for the program are reasonable and consistent with industry standards.

2. Dealer participation is not conditioned on participation in any other program or
on ratings derived from customer surveys.

E. For the purposes of this section:

1. "Controlling" means dictating, limiting, establishing, setting or endorsing as a
basis for a retail transaction any price other than the manufacturer's suggested retail
price.

2. "Dealer" or "dealership" means a new motor vehicle dealer or franchisee.

3. "Factory":

(a) Means a manufacturer, importer or distributor or any legal entity in which a
manufacturer, importer or distributor owns a majority interest or has direct or indirect
power to direct or cause the direction of the management whether through voting
securities, contract or otherwise.

(b) Excludes any new motor vehicle dealer, used motor vehicle dealer or trailer
manufacturer.

(c) Excludes any agent, affiliate, representative or subsidiary that is primarily
engaged in the business of rental of passenger and commercial motor vehicles and
industrial and construction equipment and activities incidental to that business if all
of the following conditions are satisfied:

(i) Passenger and commercial motor vehicles sold by the agent, affiliate,
representative or subsidiary are limited to used passenger and commercial motor vehicles
that have been previously used exclusively and regularly by the agent, affiliate,
representative or subsidiary in the conduct of business and used passenger and commercial
motor vehicles traded in on motor vehicles sold by the agent, affiliate, representative
or subsidiary.

(ii) Warranty repairs performed by the agent, affiliate, representative or
subsidiary on passenger and commercial motor vehicles are limited to those passenger and
commercial motor vehicles that it owns, previously owned or takes in trade.

(iii) Motor vehicle financing provided by the agent, affiliate, representative or
subsidiary to retail consumers for passenger and commercial motor vehicles is limited to
vehicles sold by the agent, affiliate, representative or subsidiary in the conduct of
business.

4. "Financing":

(a) Means the financial service of providing retail consumers the ability to pay
for a purchase or lease of a new or used motor vehicle, parts or services over an
extended period of time.

(b) Does not include the furnishing of credit cards capable of general use in
retail transactions or the provision of any loans secured by real estate.

5. "Parts":

(a) Means all items that are designed to be incorporated within or attached to or
used to operate, maintain or service a motor vehicle.

(b) Does not include any of the following:

(i) Parts purchased or provided for use by professional racing enterprises.

(ii) Parts no longer included in the current factory price schedule.

(iii) Specialized parts for research vehicles or other similar uses of limited
application.

(iv) Owners' manuals or repair manuals.

(v) Parts that are provided by an automotive recycler in the normal course of
business for an automotive recycler.

(vi) Motor vehicle keys.

6. "Service" means either of the following:

(a) Motor vehicle warranty and nonwarranty repairs or maintenance, including both
parts and labor.

(b) Extended warranties, vehicle mechanical maintenance insurance and similar
vehicle repair service contracts.

7. "Vehicle or product" means a new motor vehicle, a used motor vehicle or parts.