CHAPTER 20 SENATE BILL No. 489* An Act concerning the dealers and manufacturers licensing act; relating to owning, acting
as or controlling new vehicle dealers; sale and delivery of vehicles and responsibilities
with respect thereto; prescribing certain prohibited acts.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. (a) Except as provided by this section, and notwithstand-
ing any other provisions of the vehicle dealers and manufacturers licens-
ing act, with respect to motor vehicles, a first stage manufacturer of ve-
hicles or second stage manufacturer of vehicles, factory branch,
distributor branch, or distributor, distributor or factory representative,
may not directly or indirectly:

      (1) Own an interest in a new vehicle dealer or dealership;

      (2) operate a new vehicle dealer or dealership; or

      (3) act in the capacity of a new vehicle dealer or dealership, or oth-
erwise sell new vehicles at retail.

      (b) A first stage manufacturer or second stage manufacturer of ve-
hicles, factory branch, distributor branch, or distributor, distributor or
factory representative may own an interest in a franchised dealer or deal-
ership, or otherwise control a dealership, for a period not to exceed 12
months from the date the first or second stage manufacturer of vehicles,
factory branch, distributor branch, or distributor, distributor or factory
representative, acquires the dealership if:

      (1) The person from whom the dealer or dealership was acquired was
new vehicle dealer; and

      (2) the dealership is for sale by the first stage manufacturer or second
stage manufacturer of vehicles, factory branch, distributor branch, or dis-
tributor, distributor or factory representative, at a reasonable price and
on reasonable terms and conditions.

      (c) On a showing of good cause by a first stage manufacturer or sec-
ond stage manufacturer of vehicles, factory branch, distributor branch,
or distributor, distributor or factory representative, as the case may be,
the director may extend the time limit set forth in subsection (b) one time
for a period of not to exceed 12 months.

      (d) For the purpose of broadening the diversity of its dealer body and
enhancing opportunities for qualified persons who are part of a group
who have historically been under-represented in its dealer body, or other
qualified persons who lack the resources to purchase a dealership out-
right, but for no other purpose, a first stage manufacturer or second stage
manufacturer of vehicles, factory branch, distributor branch, or distrib-
utor, distributor or factory representative, may temporarily own an inter-
est in a new vehicle dealer or dealership if the first or second stage man-
ufacturer of vehicles, factory branch, distributor branch, or distributor,
distributor or factory representative's participation in the new vehicle
dealer or dealership is in a bona fide relationship with a new vehicle dealer
who:

      (1) Has made a significant investment in the new vehicle dealer or
dealership, which is subject to loss;

      (2) has an ownership interest in the new vehicle dealer or dealership;
and

      (3) operates the new vehicle dealer or dealership under a plan to
acquire full ownership of the new vehicle dealer or dealership within a
reasonable time and under reasonable terms and conditions.

      (e) A first stage manufacturer of vehicles or a second stage manufac-
turer of vehicles may own a minority interest in an entity that owns and
operates a new vehicle dealer, licensed under the dealers and manufac-
turer's licensing act, of the line-make manufactured by the first or second
stage manufacturer if all of the new vehicle dealers owned and operated
by the entity in this state are new vehicle dealers of only the line-make
manufactured by the manufacturer and if, on January 1, 2000: (1) There
were not more than two new vehicle dealers of that line-make licensed
as new vehicle dealers in this state; and (2) at the time the manufacturer
first acquires an ownership interest or assumes operation or control, the
distance between any new vehicle dealer owned and operated by an entity
in which the manufacturer has an ownership interest and the nearest
unaffiliated new vehicle dealer of the same line-make is not less than 100
miles.

      (f) The words or phrases used in this section shall have the meanings
otherwise provided by law, except the following specific words or phrases:

      (1) ``Dealership'' means any physical premises, equipment, and busi-
ness facilities on or with which a new vehicle dealer operates its business,
including the sale or repair of motor vehicles. Dealership includes prem-
ises or facilities at which a person engages in the repair of motor vehicles
if repairs are performed pursuant to the terms of a franchise agreement
or a motor vehicle manufacturer's warranty; and

      (2) ``line-make vehicle'' means those new motor vehicles which are
offered for sale, lease or distribution under a common name, trademark,
service mark or brand name of the manufacturer or distributor of the
same.

      (g) The provisions of this section shall not apply to a first stage man-
ufacturer or second stage manufacturer of vehicles, factory branch, dis-
tributor branch, or distributor, distributor or factory representative as to
only those dealers or dealerships which are already owned by such first
stage manufacturer or second stage manufacturer of vehicles, factory
branch, distributor branch, or distributor, distributor or factory represen-
tative, as the case may be, on the effective date of this act.

      Sec.  2. (a) In addition to any other restrictions or requirements im-
posed by law, no first stage manufacturer or second stage manufacturer
of vehicles, factory branch, distributor branch, or distributor or factory
representative may deliver a motor vehicle in this state to a person in this
state, unless such motor vehicle is delivered to the person by a vehicle
dealer licensed to do business in the state of Kansas pursuant to the
dealers and manufacturers licensing act and as provided in this section.
Unless otherwise provided by law, all new motor vehicles shall be deliv-
ered as required by this section by a new vehicle dealer who is a party to
a franchise agreement for the same line-make vehicle as that to be deliv-
ered and in the case of used motor vehicles, then by a new vehicle dealer
or used vehicle dealer. As used in this section, the term ``line-make ve-
hicle'' shall have the same meaning as provided in section 1, and amend-
ments thereto.

      (b) The requirements of this section shall not apply to:

      (1) A person to whom the provisions of subsection (v) of K.S.A. 1999
Supp. 8-2404, and amendments thereto, apply;

      (2) motor vehicles delivered by one licensed motor vehicle dealer to
another within the scope of such license, including those delivered by
first stage manufacturers and second stage manufacturers to each other;

      (3) deliveries of motor vehicles, including those which are used, to
new vehicle dealers for resale in this state by such new vehicle dealer;

      (4) deliveries of used motor vehicles to auction motor vehicle dealers,
used vehicle dealers and salvage vehicle dealers for resale in this state;
and

      (5)  (A) deliveries of motor vehicles to first stage converters and sec-
ond stage converters for the construction and sale of motor vehicles pro-
duced by such licensee; or

      (B) the resulting motor vehicles so constructed and produced by such
licensee if it has not historically relied primarily upon franchise agree-
ments with new vehicle dealers for the retail sale in this state of a material
portion of the motor vehicles it produces and does not primarily utilize
or rely upon franchise agreements between itself and new vehicle dealers
for the retail sale in this state of new motor vehicles produced by such
first or second stage convertor.

      Sec.  3. If a transaction for the sale of a new motor vehicle which does
not take place in the state of Kansas requires or allows delivery in the
state of Kansas, then such new motor vehicle shall be deemed to have
been sold in this state for purposes of meeting the definition set forth in
subsection (a)(2) of K.S.A. 50-645, and amendments thereto, upon deliv-
ery of such motor vehicle within the state of Kansas to a consumer as
defined in subsection (a)(1) of K.S.A. 50-645, and amendments thereto,
and the new motor vehicle shall thereafter be subject to the provisions
of K.S.A. 50-645 and 50-646, and amendments thereto.

      Sec.  4. No dealer may aid or abet a person in violating the dealers
and manufacturers licensing act.

      Sec.  5. If any provision of this act or the application thereof to any
person or circumstance is held invalid, the invalidity does not affect other
provisions or applications of this act which can be given effect without
the invalid provision or application, and to this end the provisions of this
act are severable.

      Sec.  6. This act shall be a part of and supplemental to the vehicle
dealers and manufacturers licensing act.

      Sec.  7. This act shall take effect and be in force from and after its
publication in the Kansas register.

Approved March 21, 2000.
 Published in the Kansas Register March 30, 2000.
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