Pub. 1 2019-2020 Issue 4

10 A fter two years and count- less hours of negotiation and advocacy, CNCDA’s dealer franchise bill, AB 179, has been signed into law. It goes with- out saying that the passage of this bill would not have been possible without the efforts of dealers statewide. With more than 800 emails sent to Governor Newsom, dozens of dealer phone calls, and many in-person conversations with elected officials at Dealer Day and beyond, the commit- ment demonstrated by you and your fellow dealers is a testament to your dedication and engagement. Thank you for your efforts. CNCDA also ap- preciates all the time and effort of the bill’s author Assemblywoman Eloise Reyes (Democrat, San Bernardino) and her staff, led by Mark Farouk, in helping California’s new car dealers get this big victory. Now that AB 179 will become law on January 1st, you must be asking: “What does this mean for my deal- ership?” While we will review the highlights of the bill below, to learn more details about AB 179 — and all the other bills that impact your deal- ership — I’d encourage each dealer- ship to send at least one person to this year’s New Laws Seminar Series beginning in November. Please be on the lookout for these important dates in our upcoming communications. Retail Warranty Reimbursement Manufacturers reimburse dealers and their employees for warranty work, in- cluding parts and labor, according to their own compensation and time for- mulas. Although California franchise law has long required manufacturers to provide reasonable compensation to dealers for their warranty work and to consider the customer retail pay- ment rates, almost no manufacturer considers the retail rates that dealers receive from their paying customers in calculating such compensation to dealers for warranty repairs. AB 179 firmly establishes the right to receive warranty reimbursement compensation, which reflects your customer retail rates for parts and labor. To obtain retail rates on war- ranty reimbursement under AB 179, submit a specified number of quali- fied repair orders to your manufac- turer, and based upon those qualified repair orders, your labor and parts rate will be determined. This meth- odology is currently used in over 35 states and includes important protections against manufacturer retaliation, penalties/surcharges, and discriminatory action. If, however, you choose to enter into a voluntary agreement with a manufacturer for warranty reimbursement, AB 179 pre- serves that right for you, so long as the reimbursement rates adequately and fairly compensate the dealer and their employees for warranty work. Factory-Mandated Facility Upgrades and Digital Service Vendors Manufacturers every few years change their color or design of their brand im- age and require dealers to make the corresponding changes to their dealer- ship facilities at considerable dealer cost. AB 179 specifies that a required facility improvement is not reasonable if you have modified the facility in the last 10 years at a cost of over $250,000. This is the same 10-year standard that applies in a dozen other states. Manufacturers far too often require dealers to perform facility improve- ments on dealerships and require the use of specific vendors for digital services, like websites, social me- dia, and data management systems. This lack of choice stifles a dealer’s ability to have up-to-date websites and forces all dealers to use one specific vendor, to the detriment of consumers and California-based Cliff Costa, Director of Government Affairs CNCDA’s Dealer Franchise Bill: What Does Its Passage Mean for Your Dealership?