CHAPTER 3. UNFAIR PRACTICES
IC 9-23-3
Chapter 3. Unfair Practices
IC 9-23-3-0.3
"Broker"
Sec. 0.3. As used in this chapter, "broker" means a person who,for a fee, a commission, or other valuable consideration, arranges oroffers to arrange a transaction involving the sale, for purposes otherthan resale, of a new or used motor vehicle and who is not:
(1) a dealer or an employee of a dealer;
(2) a distributor or an employee of a distributor; or
(3) at any point in the transaction, the bona fide owner of thevehicle involved in the transaction.
As added by P.L.268-2003, SEC.28.
IC 9-23-3-0.5
"Uniform time standards manual"
Sec. 0.5. As used in this chapter, "uniform time standardsmanual", for purposes of section 14(c) of this chapter, means aschedule established by a manufacturer or distributor setting forth thetime allowances for the diagnosis and performance of warranty workand service.
As added by P.L.78-2002, SEC.5. Amended by P.L.1-2003, SEC.51.
IC 9-23-3-1
Requiring purchase of equipment, part, or accessory as conditionof sale
Sec. 1. It is an unfair practice for a dealer to require a purchaserof a motor vehicle, as a condition of sale and delivery of the motorvehicle, to purchase any equipment, part, or accessory not ordered bythe purchaser unless the equipment, part, or accessory is alreadyinstalled on the motor vehicle when received by or offered for saleby the dealer or is required by law.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-2
Willful failure of dealer to perform vehicle delivery andpreparation obligations
Sec. 2. It is an unfair practice for a dealer to willfully fail toperform the obligations placed on the dealer in connection with thedelivery and preparation of a new motor vehicle for retail sale asprovided in the manufacturer's or distributor's preparation anddelivery agreement applicable to the motor vehicle.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-3
Willful failure of dealer to perform warranty obligations
Sec. 3. It is an unfair practice for a dealer to willfully fail toperform the obligations placed on the dealer in connection with themanufacturer's or distributor's warranty agreement applicable to any
motor vehicle sold by that dealer.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-4
Sale of vehicle having trade name or mark for which dealer lacksfranchise
Sec. 4. It is an unfair practice for a dealer to sell any new motorvehicle having a trade name, trade or service mark, or relatedcharacteristics for which the dealer does not have a franchise ineffect at the time of the sale. However, vehicles having more thanone (1) or more trade name, service mark, or related characteristic asa result of modification or further manufacture by a manufacturer,converter manufacturer, or an automotive mobility dealer licensedunder this article may be sold by a franchisee appointed by thatmanufacturer, converter manufacturer, or automotive mobility dealer.
As added by P.L.2-1991, SEC.11. Amended by P.L.147-2009,SEC.13.
IC 9-23-3-5
Willful failure of dealer to perform fiduciary duty to collect andremit gross retail tax
Sec. 5. It is an unfair practice for a dealer to willfully fail toperform the fiduciary duty imposed upon the dealer by IC 6-2.5-2-1with regard to the collection and remittance of the gross retail tax.Willful violation of the fiduciary duty includes written or oralagreements between a dealer and a prospective purchaser that wouldgive the appearance that a bona fide trade-in has taken place, whenin fact the purpose of the agreement is to reduce the prospectivepurchaser's gross retail tax and thereby deprive the state of revenue.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-6
Sale, exchange, or transfer by dealer of rebuilt vehicle withoutdisclosure of rebuilding
Sec. 6. It is an unfair practice for a dealer to sell, exchange, ortransfer a rebuilt vehicle without disclosing in writing to thepurchaser, customer, or transferee, before consummating the sale,exchange, or transfer, the fact that the vehicle is a rebuilt vehicle ifthe dealer knows or should reasonably know the vehicle is a rebuiltvehicle.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-6.5
Document preparation fees
Sec. 6.5. It is an unfair practice for a dealer to require a purchaserof a motor vehicle as a condition of the sale and delivery of themotor vehicle to pay a document preparation fee, unless the fee:
(1) reflects expenses actually incurred for the preparation ofdocuments;
(2) was affirmatively disclosed by the dealer; (3) was negotiated by the dealer and the purchaser;
(4) is not for the preparation, handling, or service of documentsthat are incidental to the extension of credit; and
(5) is set forth on a buyer's order or similar agreement by ameans other than preprinting.
As added by P.L.102-1991, SEC.1.
IC 9-23-3-7
Violation of deceptive franchise practices provisions
Sec. 7. (a) It is an unfair practice for a manufacturer or distributorto violate IC 23-2-2.7.
(b) It is an unfair practice for a manufacturer or distributor toenter into an agreement in which a dealer is required to waive theprovisions of:
(1) this chapter; or
(2) IC 23-2-2.7.
However, this subsection does not apply to a voluntary agreement inwhich separate consideration is offered and accepted.
As added by P.L.2-1991, SEC.11. Amended by P.L.17-2010, SEC.2.
IC 9-23-3-8
Manufacturer or distributor coercing dealer orders of parts,accessories, or equipment
Sec. 8. It is an unfair practice for a manufacturer or distributor tocoerce a dealer to order from a person parts, accessories, equipment,machinery, tools, appliances, or any other commodity.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-9
Manufacturer or distributor requiring changes in capital structureor business financing of dealer
Sec. 9. It is an unfair practice for a manufacturer or distributor toprevent or require or attempt to prevent or require by contract orotherwise, any change in the capital structure of a dealer or themeans by or through which the dealer finances the dealer's operation,if the dealer at all times meets any reasonable capital standardsagreed to by the dealer and the manufacturer or distributor. A changein capital structure does not cause a change in the principalmanagement or have the effect of a sale of the franchise without theconsent of the manufacturer or distributor.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-10
Manufacturer or distributor requiring changes in dealermanagement
Sec. 10. It is an unfair practice for a manufacturer or distributorto prevent or require or attempt to prevent or require a dealer tochange the dealer's executive management, other than the principaldealer operator or operators if the franchise was granted in relianceupon the personal qualifications of those persons.As added by P.L.2-1991, SEC.11.
IC 9-23-3-11
Restraint by manufacturer or distributor on sale or transfer ofinterest by dealer or its officers, partners, or stockholders
Sec. 11. It is an unfair practice for a manufacturer or distributorto prevent or require or attempt to prevent or require by contract orotherwise, a dealer or an officer, a partner, or a stockholder of adealer to sell or transfer a part of the interest of any of them to anyother person or persons. A dealer, an officer, a partner, or astockholder may not sell, transfer, or assign the franchise or a rightunder the franchise without the consent of the manufacturer ordistributor, which consent may not be unreasonably withheld.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-12
Manufacturer or distributor preventing dealer from receiving faircompensation for franchised business
Sec. 12. It is an unfair practice for a manufacturer or distributorto prevent or attempt to prevent a dealer from receiving fair andreasonable compensation for the value of the franchised business asa going concern. The dealer may not transfer or assign the dealer'sfranchise without the consent of the manufacturer or distributor, andthe manufacturer or distributor may not unreasonably withholdconsent.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-13
Employment of unlicensed representative for manufacturer ordistributor
Sec. 13. It is an unfair practice for a manufacturer or distributorto employ a person as a representative who has not been licensedunder this article.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-14
Payment of dealer for labor costs; uniform warrantyreimbursement policies
Sec. 14. (a) This section does not authorize a manufacturer ordistributor and its franchisees in Indiana to establish a uniformhourly labor reimbursement rate effective for the entire state.
(b) It is an unfair practice for a manufacturer or distributor to failto compensate to a dealer the posted hourly labor rate for the workand services the dealer is required to perform in connection with thedealer's delivery and preparation obligations under any franchise orfail to compensate to a dealer the posted hourly labor rate for laborand other expenses incurred by the dealer under the manufacturer'swarranty agreements as long as the posted rate is reasonable.Judgment of the reasonableness includes consideration of charges forsimilar repairs by comparable repair facilities in the local area as
well as mechanic's wages and fringe benefits.
(c) A manufacturer or distributor and at least thirty percent (30%)of its franchisees in Indiana of the same line make may agree in anexpress written contract citing this section to a uniform warrantyreimbursement policy to be used by franchisees for the performanceof warranty repairs. The contract must include the reimbursement forparts used in warranty repairs or the use of a uniform time standardsmanual, or both. The allowance for diagnosis within the uniformtime standards manual must be reasonable and adequate for the workand service to be performed. The manufacturer or distributor shallhave:
(1) only one (1) agreement with each line make; and
(2) a reasonable and fair procedure for franchisees to request amodification or adjustment of a standard included in theuniform time standards manual.
(d) A contract described in subsection (c) must meet the followingcriteria:
(1) Establish a uniform parts reimbursement rate that must begreater than the manufacturer's or distributor's nationallyestablished parts reimbursement rate in effect at the time thecontract becomes effective. A subsequent contract must includea uniform reimbursement rate that is equal to or greater than therate in the immediately prior contract.
(2) Apply to all warranty repair orders written while theagreement is in effect.
(3) At any time during the period the contract is in effect:
(A) be available to any franchisee of the same line make asthe franchisees who entered into the contract with themanufacturer or distributor; and
(B) be available to the franchisee of the same line make onthe same terms as apply to the franchisees who entered intothe contract with the manufacturer or distributor.
(4) Be for a term not to exceed three (3) years.
(5) Allow any party to the uniform warranty reimbursementpolicy to terminate the policy with thirty (30) days prior writtennotice to all parties upon the annual anniversary of the policy,if the policy is for at least one (1) year.
(6) Remain in effect for the entire life of the original period ifthe manufacturer and at least one (1) franchisee remain partiesto the policy.
(e) A manufacturer or distributor that enters into a contract withits franchisees under subsection (c) may only seek to recover its costsfrom a franchisee that receives a higher reimbursement rate, ifauthorized by law, subject to the following:
(1) Costs may be recovered only by increasing invoice prices onnew vehicles received by the franchisee.
(2) A manufacturer or distributor may make an exception forvehicles that are titled in the name of a purchaser in anotherstate. However, price increases imposed for the purpose ofrecovering costs imposed by this section may vary from time to
time and from model to model and must apply uniformly to allfranchisees of the same line make that have requestedreimbursement for warranty repairs at a level higher thanprovided for in the agreement.
(f) A manufacturer or distributor that enters into a contract withits franchisees under subsection (c) shall do the following:
(1) Certify to the secretary of state under oath, in a writingsigned by a representative of the manufacturer or distributor,that at the time the contract was entered into at least thirtypercent (30%) of the franchisees of the line make were partiesto the contract.
(2) File a copy of the contract with the bureau at the time of thecertification.
(3) Maintain a file that contains the information upon which thecertification required under subdivision (1) is based for three(3) years after the certification is made.
As added by P.L.2-1991, SEC.11. Amended by P.L.78-2002, SEC.6;P.L.184-2007, SEC.28.
IC 9-23-3-15
Payment or disapproval of dealer claims; notice of disapproval;audits and charge backs
Sec. 15. (a) It is an unfair practice for a manufacturer ordistributor to:
(1) fail to pay all claims made by dealers for compensation fordelivery and preparation work and warranty work within thirty(30) days after approval;
(2) fail to approve or disapprove the claims within thirty (30)days after receipt; or
(3) disapprove a claim without notice to the dealer in writing ofthe grounds for disapproval.
(b) A manufacturer or distributor may:
(1) audit claims made by a dealer; or
(2) charge back to a dealer any amounts paid on false orunsubstantiated claims;
for up to two (2) years after the date on which a claim is paid.However, the limitations of this subsection do not apply if themanufacturer or distributor can prove fraud on a claim. Amanufacturer or distributor shall not discriminate among dealers withregard to auditing or charging back claims.
As added by P.L.2-1991, SEC.11. Amended by P.L.76-2007, SEC.1.
IC 9-23-3-16
Selling motor vehicle to unlicensed person for resale
Sec. 16. It is an unfair practice for a manufacturer or distributorto sell a motor vehicle for resale to a person not licensed under thisarticle.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-17 Failure to indemnify or hold harmless dealer for losses, costs, andexpenses from suits for defects in vehicles or other goods orservices
Sec. 17. It is an unfair practice for a manufacturer or distributorto refuse or fail to indemnify and hold harmless a dealer, uponwritten notification from the dealer, from all losses, costs, andexpenses that result or arise from or are related to a complaint, claim,defense, or suit against the dealer that concerns defects in a motorvehicle or other goods or services that are the responsibility of themanufacturer.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-18
Repealed
(Repealed by P.L.258-1999, SEC.3.)
IC 9-23-3-19
False, deceptive, or misleading advertising; other deceptive acts orpractices
Sec. 19. It is an unfair practice for an automobile auctioneer, awholesale dealer, or a transfer dealer, in connection with theauctioneer's or dealer's business, to use false, deceptive, ormisleading advertising or to engage in deceptive acts or practices.
As added by P.L.2-1991, SEC.11. Amended by P.L.268-2003,SEC.29.
IC 9-23-3-20
Employees, agents, officers, partners, or representatives of licensee
Sec. 20. It is an unfair practice for an employee, an agent, anofficer, a partner, or a representative of a licensee to engage in apractice prohibited by this chapter.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-21
Franchise termination
Sec. 21. It is an unfair practice for a manufacturer to terminate afranchise in violation of IC 23-2-2.7-3.
As added by P.L.2-1991, SEC.11.
IC 9-23-3-22
Transaction conditioned upon continuation of franchise
Sec. 22. (a) A dealer may not transfer, sell, or assign the businessand assets of a dealership or an interest in the dealership to anotherperson that contemplates or is conditioned upon a continuation of thefranchise relationship with the manufacturer or distributor unless thedealer first:
(1) notifies the manufacturer or distributor of the dealer'sdecision to make the transfer, assignment, or sale by writtennotice; and
(2) obtains the approval of the manufacturer or distributor.The dealer must provide the manufacturer or distributor withcompleted application forms and related information generally usedby the manufacturer or distributor to conduct its review of such aproposal, and a copy of all agreements regarding the proposedtransfer, assignment, or sale.
(b) The manufacturer or distributor shall send a letter by certifiedmail to the dealer within sixty (60) days of receipt of the informationspecified in subsection (a). The letter must indicate any disapprovalof the transfer, assignment, or sale and must set forth the materialreasons for the disapproval. If the manufacturer or distributor doesnot respond by letter within the sixty (60) day period, themanufacturer's or distributor's consent to the proposed transfer,assignment, or sale is considered to have been granted. Amanufacturer or distributor may not unreasonably withhold approvalof a transfer, assignment, or sale.
(c) A manufacturer or distributor has a right of first refusal asspecified in the franchise agreement to acquire the new vehicledealer's assets or ownership if there is a proposed change of morethan fifty percent (50%) of the dealer's ownership or the transfer ofmore than fifty percent (50%) of the new vehicle dealer's assets if allof the following are met:
(1) The manufacturer or distributor notifies the dealer in writingof its intent to exercise its right of first refusal within the sixty(60) day notice limit provided in subsection (b).
(2) The exercise of the right of first refusal will result in thedealer and the dealer's owners receiving consideration, terms,and conditions that are either the same as or better than thosethey have contracted to receive under the proposed change ofmore than fifty percent (50%) of the dealer's ownership or thetransfer of more than fifty percent (50%) of the new vehicledealer's assets.
(3) The proposed change of the dealership's ownership or thetransfer of the new vehicle dealer's assets does not involve thetransfer of assets or the transfer or issuance of stock by thedealer or one (1) or more of the dealer's owners to any of thefollowing:
(A) A designated family member or members including anyof the following members of one (1) or more dealer owners:
(i) The spouse.
(ii) A child.
(iii) A grandchild.
(iv) The spouse of a child or a grandchild.
(v) A sibling.
(vi) A parent.
(B) A manager:
(i) employed by the dealer in the dealership during theprevious four (4) years; and
(ii) who is otherwise qualified as a dealer operator.
(C) A partnership or corporation controlled by any of thefamily members described in clause (A). (D) A trust arrangement established or to be established:
(i) for the purpose of allowing the new vehicle dealer tocontinue to qualify as such under the manufacturer's ordistributor's standards; or
(ii) to provide for the succession of the franchiseagreement to designated family members or qualifiedmanagement in the event of the death or incapacity of thedealer or its principal owner or owners.
(4) Except as otherwise provided in this subsection, themanufacturer or distributor agrees to pay the reasonableexpenses, including reasonable attorney's fees, that do notexceed the usual, customary, and reasonable fees charged forsimilar work done for other clients, and that are incurred by theproposed owner or transferee before the manufacturer's ordistributor's exercise of its right of first refusal in negotiatingand implementing the contract for the proposed change of thedealer ownership or the transfer of the new vehicle dealer'sassets. Payment of expenses and attorney's fees is not requiredif the dealer has failed to submit an accounting of thoseexpenses within twenty (20) days of the dealer's receipt of themanufacturer's or distributor's written request for such anaccounting. An expense accounting may be requested by amanufacturer or distributor before exercising its right of firstrefusal.
(d) Violation of this section by the manufacturer or distributor isan unfair practice by a manufacturer or distributor.
As added by P.L.152-1999, SEC.1.
IC 9-23-3-23
Manufacturer or distributor requiring changes in franchise ordealership
Sec. 23. It is an unfair practice for a manufacturer, distributor,officer, or agent to do any of the following:
(1) Require, coerce, or attempt to coerce any new motor vehicledealer in Indiana to:
(A) change location of the dealership;
(B) make any substantial alterations to the use of franchises;or
(C) make any substantial alterations to the dealershippremises or facilities;
if to do so would be unreasonable or would not be justified bycurrent economic conditions or reasonable businessconsiderations. This subdivision does not prevent amanufacturer or distributor from establishing and enforcingreasonable facility requirements.
(2) Require, coerce, or attempt to coerce any new motor vehicledealer in Indiana to divest its ownership of or management inanother line or make of motor vehicles that the dealer hasestablished in its dealership facilities with the prior writtenapproval of the manufacturer or distributor. (3) Establish or acquire wholly or partially a franchisor ownedoutlet engaged wholly or partially in a substantially identicalbusiness to that of the franchisee within the exclusive territorygranted the franchisee by the franchise agreement or, if noexclusive territory is designated, competing unfairly with thefranchisee within a reasonable market area. A franchisor is notconsidered to be competing unfairly if operating:
(A) a business for less than two (2) years;
(B) in a bona fide retail operation that is for sale to anyqualified independent person at a fair and reasonable price;or
(C) in a bona fide relationship in which an independentperson or persons have made a significant investment subjectto loss in the business operation and can reasonably expectto acquire majority ownership or managerial control of thebusiness on reasonable terms and conditions.
This subdivision shall not apply to recreational vehiclemanufacturer franchisors.
As added by P.L.152-1999, SEC.2. Amended by P.L.118-2001,SEC.3; P.L.49-2007, SEC.1.
IC 9-23-3-24
Relocation of new motor vehicle dealers
Sec. 24. (a) This section does not apply to the relocation of a newmotor vehicle dealer to a location that is not more than two (2) milesfrom its established place of business.
(b) This section does not apply to the reopening or replacement ina relevant market area of a closed dealership that has been closedwithin the preceding year, if the established place of business of thereopened or replacement dealer is within two (2) miles of theestablished place of business of the closed dealership.
(c) Before a franchisor enters into a franchise establishing orrelocating a new motor vehicle dealer within a relevant market areawhere the same line make is represented, the franchisor shall givewritten notice to each new motor vehicle dealer of the same linemake in the relevant market area of the franchisor's intention toestablish an additional dealer or to relocate an existing dealer withinthat relevant market area.
(d) Not later than thirty (30) days after:
(1) receiving the notice provided for in subsection (c); or
(2) the end of any appeal procedure provided by the franchisor;
a new motor vehicle dealer may bring a declaratory judgment actionin the circuit court for the county in which the new motor vehicledealer is located to determine whether good cause exists for theestablishing or relocating of a proposed new motor vehicle dealer. Ifan action is filed, the franchisor may not establish or relocate theproposed new motor vehicle dealer until the circuit court hasrendered a decision on the matter. An action brought under thissection shall be given precedence over all other civil matters on thecourt's docket. (e) In determining whether good cause exists for establishing orrelocating an additional new motor vehicle dealer for the same linemake, the court shall take into consideration the existingcircumstances, including the following:
(1) Permanency of the investment.
(2) Effect on the retail new motor vehicle business and theconsuming public in the relevant market area.
(3) Whether it is injurious or beneficial to the public welfare.
(4) Whether the new motor vehicle dealers of the same linemake in that relevant market area are providing adequatecompetition and convenient consumer care for the motorvehicles of that line make in the market area, including theadequacy of motor vehicle sales and qualified servicepersonnel.
(5) Whether the establishment or relocation of the new motorvehicle dealer would promote competition.
(6) Growth or decline of the population and the number of newmotor vehicle registrations in the relevant market area.
(7) The effect on the relocating dealer of a denial of itsrelocation into the relevant market area.
As added by P.L.118-2001, SEC.4.
IC 9-23-3-25
Acting, offering to act as, or professing to be a broker of vehicles
Sec. 25. It is an unfair practice for a person to:
(1) act as;
(2) offer to act as; or
(3) profess to be;
a broker in the advertising, buying, or selling of at least twelve (12)new or used vehicles per year.
As added by P.L.268-2003, SEC.30.