Pub. 62 2021-2022 Issue 1

12 New Point and Relocation Protests With respect to a franchised dealership’s new point, in 1971, the commission could deny a dealer application to establish a new dealership where the same line- make of new motor vehicle was represented. In order for the commission to deny the new point, the licensed dealership must be adequately representing the manufacturer or distributor in the community and “no good cause” shown to be in the public interest for establishing an additional dealership. 30 Six years later, the legislature gave the commission direction as to when it could deny a proposed dealership a license “in the community” by adding a 25-mile radius requirement for a licensed dealer to have standing to protest a new point. The commission could now deny the new point if the established dealership is: 1. Within 25 miles of the proposed new point; 2. Adequately representing the manufacturer or distributor; 3. In compliance with their agreement; and 4. No good cause exists for an additional dealership in the public interest. 31 The legislature in 1987 amended the mileage distance to protest a new point from 25 miles to 15 miles of the proposed dealership site. 32 In 1995, the legislature determined that if a dealership’s relocation is farther from a same-line make dealer, then the proposed relocation was not subject to protest. 33 Today, a protest of a new point or a relocation is often settled through mediation; however, the rights of the parties are statutorily provided for through hearing and appeal. Sale of New Motor Vehicles As constructed in 1971 and as necessary throughout these past 50-plus years, a required license issued by the agency is a prerequisite to engaging in business or serving as a dealer selling and servicing new motor vehicles through a franchise; manufacturing new motor vehicles; or distributing new motor vehicles. To address the converter and second stage equipment manufacturer issue, the legislature included a new section in 1981 providing that a person must have a valid commission-issued license to buy, sell, or exchange a new motor vehicle for the line-make that is represented and advertised to the public unless a second stage or allied equipment manufacturer modifies or converts a new vehicle with the original motor vehicle warranty intact. The new language specifically provided: “No person may represent to the public, by advertising or other means, that he is engaged in the business of buying, selling, or exchanging new motor vehicles unless he holds a valid license issued by the Commission for the make or makes of new motor vehicles being bought, sold, or exchanged; or unless acting as a bona fide employee or agent of the licensee; or unless such person is a second stage or allied equipment manufacturer modifying or converting new motor vehicles and offering them for sale with the original manufacturer’s warranty unimpaired.” 34 The legislature defined “engaging in the business of buying, selling, or exchanging new motor vehicles” to mean: 1) Displaying for sale a new motor vehicle on a lot or showroom; 2) Advertising a new motor vehicle for sale; or 3) Regularly or actively soliciting a buyer for a new motor vehicle. 35 This time period – the 1980s – saw vans as an increasingly popular vehicle, and as more vans were converted and more vehicles modified, the buyer needed certainty regarding the responsible party for the vehicle’s warranty, and the state needed clarification for titling. In response, the legislature determined that the “make” of a vehicle is the chassis manufacturer and repealed language allowing a second stage or allied equipment manufacturer or converter to sell a modified or converted new motor vehicle with the original equipment manufacturer’s warranty unimpaired. 36 A specific manufacturer, distributor, and representative prohibition to operate as a “dealer” was added to the code in 1995. The only exception to the prohibition was if a franchised dealer previously owned the dealership, and the dealership is currently for sale at a reasonable price or the manufacturer, distributor, or representative operates it in a bona fide relationship with a franchised dealer who is required to make a significant investment, subject to loss, and who reasonably expects to acquire full ownership. 37 This accommodation to a franchisor and the franchisee and that dealership’s community allowed a dealership to continue in business if no buyer was readily available for a dealership closing its doors. Nineteen ninety-nine brought about a legislative response to events necessitating a more diverse dealer body and maintaining a sound system of distributing and selling vehicles. To effectively address these  TEXAS MOTOR VEHICLE CODE — CONTINUED FROM PAGE 11