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What Is R.S.A. 357-C:7(VI)?
R.S.A. 357-C:7(VI) is a key provision in New Hampshire’s Dealer Bill of Rights. It mandates that manufacturers must repurchase certain items from dealers when a Dealer Agreement is terminated, regardless of whether the termination is voluntary or involuntary. This law is designed to protect dealers from being left with unsellable inventory, unused tools, signs, and other items.
To note, a manufacturer cannot terminate a dealership in New Hampshire without the dealer’s consent or receiving an Order from the Motor Vehicle Industry Board that certain statutory criteria are satisfied. In other words, a manufacturer cannot terminate a dealership by simply sending a letter that states the Dealer Agreement will terminate on a certain date. If you receive such a letter and do not agree to terminate the franchise, contact legal counsel immediately. The statute requires a dealer to file a Protest to challenge the termination within a relatively short period of time.
What Are the Manufacturer’s Repurchase Obligations?
Under R.S.A. 357-C:7(VI), manufacturers are required to repurchase the following from a terminated dealership:
- Units: A manufacturer is required to repurchase all new, unsold, undamaged, and complete units in the dealer’s inventory that have original invoices bearing original dates within 24 months (or 36 months for equipment) prior to the effective termination date, as long as the unit satisfies the mileage requirement. For motor vehicles, the mileage requirement is less than 750 miles on the odometer. Motorcycles must have less than 350 miles on the odometer. The manufacturer must repurchase the units at dealer cost, plus manufacturer charges for distribution, delivery, and taxes paid by the dealer, less all allowances paid to the dealer. The manufacturer is also required to reimburse the dealer for insurance and floor plan costs for each eligible unit from the effective termination date to the date the manufacturer picks up the units.
- Parts and Accessories: A manufacturer is required to repurchase at dealer cost each new, unused, undamaged, and unsold part or accessory available in the current parts catalog, as long as the part or accessory was purchased from the manufacturer or an affiliated company or authorized vendor and is still in the original, resalable packaging and in unbroken lots. A part is deemed to be included in the “current parts catalog” if it is available to be purchased from the manufacturer on the date the notice of termination was issued.
- Signage: A manufacturer is required to repurchase for fair market value each undamaged sign owned by the dealer that bears a trademark, trade name, or commercial symbol used or claimed by the manufacturer, if the sign was purchased at the manufacturer’s request.
- Special Tools and Equipment: At the dealer’s option, a manufacturer is required to repurchase for fair market value all tools and equipment owned by the dealer which the manufacturer recommended in writing and designated as special tools and equipment, the dealer purchased from or at the request of the manufacturer, and are in usable and good condition (normal wear and tear excepted).
- Cost of Transporting, Handling, Packing, and Loading: A manufacturer is required to pay the cost of transporting, handling, packing, and loading of motor vehicles, parts, signs, tools, and special equipment subject to repurchase.
- Equipment or Service Contracts: A manufacturer is required to pay the remaining amount to be paid on any equipment or service contracts required by or leased from the manufacturer or a subsidiary or company affiliated with the manufacturer.
Depending on the situation, other repurchase obligations may apply. We recommend speaking with legal counsel to determine if any additional repurchase obligations are applicable.
Repurchase Timelines
The manufacturer is required to complete the buyback process and issue payment within ninety (90) days of the effective termination date.
No Agreement Required
Manufacturers often ask dealers to sign an agreement before starting the repurchase process, which is not required. By signing such an agreement, you may unknowingly release certain rights under the statute. Seek legal counsel before signing any documents in the repurchase process.
Dealers should work with legal counsel experienced with the Dealer Bill of Rights to ensure manufacturers comply with the law, to avoid inadvertently waiving any legal rights, and to facilitate a smooth repurchase process.
Author: Hilary Holmes Rheaume
