25 QUESTION 10: How far back may the manufacturer audit warranty claims or other incentive and reimbursement programs? The Illinois Motor Vehicle Franchise Act provides that the manufacturer shall have the right to require documentation for warranty claims and to audit such claims within a one-year period from the date the claim was paid or credit issued by the manufacturer. With regard to other incentive and reimbursement programs, the manufacturer has the right to audit such claims within a 12-month period after the date of the transactions that are subject to audit. Notwithstanding the above, the manufacturer retains the right to charge back any fraudulent claim if he establishes in a court of competent jurisdiction in this State that the claim is fraudulent. QUESTION 11: What amount of damage must be disclosed on a new or used vehicle? On a new vehicle, the Illinois Motor Vehicle Franchise Act, as amended Jan. 1, 2003, provides that a dealer must disclose in writing any damage of which he has actual knowledge, incurred between the end of the manufacturing process and the time of delivery, which exceeds 6% of the MSRP of the vehicle, excluding damage to glass, tires, bumpers, video and telephonic components, and in-dash audio equipment, if said items were replaced with OEM equipment. With regard to the sale of a used vehicle, no Illinois Statute applies. Accordingly, the theory of common law misrepresentation would provide for dealer liability for an intentional misrepresentation of a material fact relied upon by the customer to his detriment. In this context, intentional means the dealer “knew or should have known” of the damage. The definition of “material” is left to the courts, but the rule of thumb is that it is material if the purchaser would have made a different purchase decision had he had knowledge of the damage. QUESTION 12: How far away must a relocated or new franchise be from an existing franchise of the same line make? The Illinois Motor Vehicle Franchise Act provides that the manufacturer may not grant an additional franchise in the relevant market area of an existing franchise of the same line make or relocate an existing motor vehicle dealership within or into the relevant market area of an existing franchise of the same line make without a showing of good cause. The appointment of a successor motor vehicle dealer is prohibited from granting an additional franchise in the relevant market area, which is defined as an area within 10 miles from the principal location of the dealership in a county of more than 300,000 persons or the area of responsibility as defined in the franchise agreement, whichever is greater, absent a showing of good cause. With regard to both a proposed relocation or grant of additional franchise, the manufacturer may attempt to show, and has the burden to establish, that good cause exists. The relocation or granting of the new franchise may not take place before the hearing process is concluded pursuant to the Franchise Act. A determination of whether good cause exists is made by the Motor Vehicle Review Board pursuant to Subsection (c) of Section 12 of the Franchise Act.
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