The Illinois Motor Vehicle Franchise Act was signed into law as Public Act 81-43, effective June 29, 1979 (introduced as Senate Bill 1002). The Act was created to address the power imbalance between automobile manufacturers and their franchised dealers and to empower dealers. As Sen. Berman, the Senate sponsor of Senate Bill 1002, said during the debate on the Senate floor: “The purpose of Senate Bill 1002 is to attempt to strike a fairer balance between the interests of the manufacturers of automobiles and their dealers that operate in all of our districts. At the present time, automobile dealers are, to a great extent, captives of the whims of the manufacturers. This bill attempts to strike a better bargaining position as to the exercise of their franchise rights with the dealers. This bill prohibits forcing dealers to take unordered cars or parts, prohibits manufacturers from canceling or failing to renew a franchise without good cause and without notice, and a number of other items …” During the same Senate debate, Sen. Johns said: “We built in our family a quarter-million-dollar dealership, brand new, worked hard to develop it. They built another dealership about six miles away. They forced us to take cars that we didn’t want. They forced us to take trucks that we ordered with different axle ratios, etc. They did everything to us that they could. Finally, we got out of the business.” Motor vehicle manufacturers still have tremendous leverage over their dealers, but the creation of the Act gave dealers a slingshot to fight back against unreasonable manufacturer demands. Before the Act, a manufacturer could force a dealer to invest in expensive dealership facilities and inventory and then turn around and authorize a new dealership in the existing dealership’s backyard. Now, a manufacturer cannot put a new dealership in the relevant market area of an existing dealer of the same line make without a showing of good cause to add a new dealership. The regulation of new points and the relocation of existing points is just one example of how the Act protects dealers from overreach by a heavy-handed manufacturer. The Act also prohibits arbitrary and unreasonable conduct, prohibits cancellation or nonrenewal of a sales and service agreement without good cause, prohibits unreasonable facility requirements and a host of other items. Enactment of the Motor Vehicle Franchise Act — 1979 10 Illinois Automobile Dealer News
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