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2019 SESSION
19101456DBe it enacted by the General Assembly of Virginia:
1. That §§ 46.2-1569.1 and 46.2-1570 of the Code of Virginia are amended and reenacted as follows:
§ 46.2-1569.1. Manufacturer or distributor right of first refusal.
Notwithstanding the terms of any franchise agreement, in the event of a proposed sale or transfer of a dealership or a proposed change in management of a dealership, the manufacturer or distributor shall be permitted to exercise a right of first refusal to acquire the new vehicle dealer's assets or ownership, if such sale or transfer is conditioned upon the manufacturer's or dealer's entering into a dealer agreement with the proposed new owner or transferee, only if all the following requirements are met:
1. To exercise its right of first refusal, the manufacturer or distributor must notify the dealer in writing within 45 days of its receipt of the completed proposal for the proposed sale or transfer;
2. The exercise of the right of first refusal will result in the dealer's and dealer's owner's receiving the same or greater consideration as they have contracted to receive in connection with the proposed change of ownership or transfer; and
3. The proposed sale or
transfer of the dealership's assets does not involve
the transfer or sale to a member or members of the family of one or more dealer
owners, or to a qualified manager or a partnership, limited liability company,
corporation, or other entity controlled by such persons; and
4.
The manufacturer or distributor agrees to pay the reasonable expenses,
including attorney's fees which do not exceed the usual, customary, and
reasonable fees charged for similar work done for other clients, incurred by
the proposed new owner and transferee prior to the manufacturer's or
distributor's exercise of its right of first refusal in negotiating and
implementing the contract for the proposed sale or transfer of the dealership
or dealership assets. Notwithstanding the foregoing, no payment of such
expenses and attorney's fees shall be required if the dealer has not submitted
or caused to be submitted an accounting of those expenses within 30 days of the
dealer's receipt of the manufacturer's or distributor's written request for
such an accounting. Such accounting may be requested by a manufacturer or
distributor before exercising its right of first refusal.
A manufacturer or distributor shall not exercise or enforce a right of first refusal if (i) the proposed sale or transfer of the dealership's assets involves the transfer or sale to a member or members of the family of one or more dealer owners, or to a qualified manager or a partnership, limited liability company, corporation, or other entity controlled by such persons, or (ii) the proposed sale or transfer is to a dealer licensed in the United States as a dealer holding a franchise from any manufacturer or distributor licensed as a manufacturer or distributer in the Commonwealth.
§ 46.2-1570. Discontinuation of distributors.
If a manufacturer or
factory branch, directly by sale or indirectly by merger or company
reorganization, transfers its right to manufacture or distribute a line-make of
motor vehicles, or discontinues its right and another manufacturer or
factory branch manufactures or distributes motor vehicles of the
same line-make or the same motor vehicles of a
renamed line-make, or if the contract between a distributor or distributor branch and a
manufacturer or importer is terminated or otherwise discontinued, all
franchises granted to motor vehicle dealers in Virginia by that manufacturer, factory branch,
distributor, or distributor branch shall
continue in full force and shall not be affected by the
transfer, termination, or discontinuance, except that the
manufacturer, factory branch, distributor,
distributor branch, representative, or other person who
undertakes to manufacture or distribute
motor vehicles of the same line-make or the same motor vehicles of a re named renamed
line-make shall be substituted for the discontinued
manufacturer, factory branch, distributor, or distributor branch under
the existing motor vehicle dealer franchises and those franchises shall be
modified accordingly.