West Virginia Franchise Law Strengthened COUNSELOR’S CORNER H appy spring, everyone. I hope everyone is excited to come out of the cloudy and cold winter and look forward to the sun and warmth. Sounds like the car-buying season. Great news: For the second time in three years, the West Virginia Dealers Association has been successful in obtaining significant changes to your franchise law. Senate Bill 173 was passed unanimously in the West Virginia Senate and on an 87-13 vote in the House of Delegates. Congratulations to Jared and all involved in helping pass West Virginia’s new franchise law. I have the pleasure of getting to deliver the particulars of this good news. We have some exciting changes that protect the franchise model in West Virginia and provide for a West Virginia dealer to maintain control over their West Virginia business. Here are our changes, which become effective June 5, 2024: 1. Right of First Refusal. West Virginia became the 12th state to prohibit the manufacturer’s right of first refusal. This was a hard fault victory. Over the last five (5) years, there have been numerous times that I have personally been involved in transactions in which a manufacturer exercised a right of first refusal against a West Virginia dealer who was purchasing a store. These stores are then assigned to out-of-state entities and take away a business owner’s right to sell their business to whomever they wish. More importantly, our West Virginia dealers wish to sell to individuals who will continue to serve their West Virginia community and provide a smooth change for their employees. These rights were previously lost under the old statute. This preserves your right as a dealer to control your business. 2. Anti-Agency Laws. This is what I am personally most excited about: protecting the franchise model, which is consumer-friendly and allows for intra-brand competition. The changes this year preserve the franchise model for our West Virginia dealers. The first change prohibits a manufacturer, through any program, agreement, incentive or otherwise, from requiring the following: (a) maintaining a website in which the manufacturer negotiates prices or other terms of sale; (b) retaining ownership of motor vehicles and using the dealer for a consignment arrangement or as a delivery agent; and (c) reserving the right to negotiate any terms of sale of the motor vehicle. A second change was more specific to the reservation system which has become so popular over the last few years. Our new law states that a manufacturer, through a retail vehicle sale or reservation system, is specifically prohibited from “interfering with” a dealer pertaining to setting price, trade-in value, financing terms or the sale of voluntary protection products. 3. Unilateral Change in Sales and Service Agreements. Another significant change impacts all Sales and Service Agreements. Our West Virginia franchise law now specifically By JOHNNIE BROWN, ESQ., Pullin, Fowler, Flanagan, Brown & Poe PLLC WVADA News 16
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