Franchising and opening a new car dealership today can be challenging. Dealers must adapt to factors like supply chain disruptions and evolving customer expectations. They also face increased competition, which sometimes includes their vehicle manufacturer franchisors.
A California bill that took effect this year aims to end unfair competition by modernizing the state’s New Motor Vehicle Franchise Law.
The California New Car Dealers Association’s (CNCDA) 2023 Franchise Bill, or AB 473, protects new car dealer franchisees from harsh requirements that could harm their businesses. CNCDA expects it to provide relief for dealers in an industry that employs 140,000 Californians.
Key provisions
AB 473 aims to create a fairer environment for new car dealerships. Some of its key provisions include:
- Preserving franchise system integrity: It prevents manufacturers from introducing new vehicle brands that rival established dealers.
- Splitting DC fast charging costs: It ensures manufacturers share the costs of installing and maintaining public DC fast chargers instead of placing the entire burden on the dealers.
- Limiting post-sale subscriptions: It limits manufacturers’ ability to offer post-sale subscriptions for features like “additional” horsepower or heated seats already part of the vehicle.
- Increasing reservation process transparency: Enforcing an open and fair reservation process prevents manufacturers from unreasonably and arbitrarily withholding vehicles.
- Requiring digital services reimbursement: Manufacturers must reimburse dealers for losses from a non-compliant digital service, especially if they preselected it.
Updating franchise laws to address technology and systems advances helps level the playing field for car dealers.
If a manufacturer abuses its power over your dealership, it is advisable to consult an experienced auto dealership law attorney. They can help you protect your rights and strengthen your claim when litigation is necessary.