Amends existing law to provide for an exception for licensed dealers in Idaho for a manufacturer or distributor with a manufacturer-owned or distributor-owned dealership.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE SENATE SENATE BILL NO. 1424 BY STATE AFFAIRS COMMITTEE AN ACT1 RELATING TO MOTOR VEHICLES; AMENDING SECTION 49-1613, IDAHO CODE, TO RE-2 VISE PROVISIONS REGARDING UNLAWFUL ACTS BY A LICENSEE; AND DECLARING AN3 EMERGENCY AND PROVIDING AN EFFECTIVE DATE.4

Be It Enacted by the Legislature of the State of Idaho:5

SECTION 1. That Section 49-1613, Idaho Code, be, and the same is hereby6 amended to read as follows:7 49-1613. UNLAWFUL ACTS BY LICENSEE. (1) It shall be unlawful for the8 holder of any license issued under the provisions of this chapter to:9 (a) Intentionally publish or circulate any advertising that is mis-10 leading or inaccurate in any material particular or that misrepresents11 any of the products sold or furnished by a licensed dealer;12 (b) Violate any of the provisions of this chapter or any of the applica-13 ble rules;14 (c) Knowingly purchase, sell or otherwise acquire or dispose of a15 stolen vehicle;16 (d) Violate any law respecting commerce in vehicles or any lawful rule17 respecting commerce in vehicles promulgated by any licensing or regu-18 lating authority now existing or hereafter created by the laws of the19 state;20 (e) Engage in the business for which the dealer is licensed without at21 all times maintaining a principal place of business;22 (f) Engage in a type of business respecting the selling or exchanging of23 vehicles for which he is not licensed;24 (g) Knowingly purchase a vehicle that has an altered or removed vehicle25 identification number plate or alter or remove a vehicle identification26 number plate;27 (h) Violate any provision of this title or any rules promulgated;28 (i) Violate any provision of the federal motor vehicle safety stan-29 dards, federal odometer laws or regulations;30 (j) Display for sale, exchange, or sell any vehicle for which the vehi-31 cle dealer does not hold title or consignment agreement or other docu-32 mentary evidence of his right to the possession of every vehicle in his33 possession; or34 (k) Issue more than one (1) temporary permit per vehicle sale pursuant35 to the provisions set forth in section 49-504(6), Idaho Code.36 (2) It shall be unlawful for any manufacturer or distributor licensed37 under this chapter to require, attempt to require, coerce, or attempt to co-38 erce, any new vehicle dealer in this state to:39 (a) Order or accept delivery of any new vehicle, part or accessory,40 equipment or any other commodity not required by law that shall not have41 been voluntarily ordered by the new vehicle dealer. This paragraph is42

2 not intended to modify or supersede any terms or provisions of a fran-1 chise requiring dealers to market a representative line of vehicles2 that the manufacturer or distributor is publicly advertising.3 (b) Order or accept delivery of any new vehicle with special features,4 accessories or equipment not included in the list price of such vehicles5 as publicly advertised by the manufacturer or distributor.6 (c) Participate monetarily in an advertising campaign or contest, or7 to purchase any promotional materials, training materials, showroom or8 other display decorations or materials at the expense of the dealer.9 (d) Enter into any agreement with the manufacturer or distributor or to10 do any other act prejudicial to the dealer by threatening to terminate11 or cancel a franchise or any contractual agreement existing between12 the dealer and the manufacturer or distributor. This paragraph is not13 intended to preclude the manufacturer or distributor from insisting14 on compliance with reasonable terms or provisions of the franchise or15 other contractual agreement, and notice in good faith to any dealer of16 the dealer's violation of those terms or provisions shall not consti-17 tute a violation of the provisions of this chapter.18 (e) Change the capital structure of the dealer or the means by or19 through which the dealer finances the operation of the dealership,20 provided that the dealer at all times meets any reasonable capital stan-21 dards determined by the manufacturer or distributor in accordance with22 uniformly applied criteria. No change in the capital structure shall23 cause a change in the principal management or have the effect of a sale24 of the franchise without the consent of the manufacturer or distribu-25 tor. Consent shall not be unreasonably withheld.26 (f) Refrain from participation in the management of, investment in, or27 the acquisition of any other line of new vehicle or related products.28 This paragraph does not apply unless the dealer maintains a reasonable29 line of credit for each make or line of new vehicle, and the dealer re-30 mains in compliance with any reasonable facilities requirements of the31 manufacturer or distributor, and no change is made in the principal man-32 agement of the dealership.33 (g) Prospectively assent to a release, assignment, novation, waiver or34 estoppel that would relieve any person from liability to be imposed by35 this chapter or to require any controversy between a dealer and a man-36 ufacturer, distributor, or representatives, to be referred to any per-37 son other than the duly constituted courts of the state or the United38 States, or to the director, if that referral would be binding upon the39 dealer.40 (h) Either establish or maintain exclusive facilities, personnel, or41 display space.42 (i) Expand facilities without a written guarantee of a sufficient sup-43 ply of new vehicles so as to justify an expansion, in light of the market44 and economic conditions.45 (j) Make significant modifications to an existing dealership or to46 construct a new vehicle dealership facility without providing a writ-47 ten guarantee of a sufficient supply of new vehicles so as to justify48 modification or construction, in light of the market and economic con-49 ditions.50

3 (3) It shall be unlawful for any manufacturer or distributor licensed1 under this chapter to:2 (a) Delay, refuse, or fail to deliver new vehicles or new vehicle parts3 or accessories in a reasonable time, and in reasonable quantity, rela-4 tive to the dealer's facilities and sales potential in the dealer's rel-5 evant market area, after acceptance of an order from a dealer having a6 franchise for the retail sale of any new vehicle sold or distributed by7 the manufacturer or distributor, any new vehicle, parts or accessories8 to new vehicles as are covered by the franchise, if the vehicle, parts,9 or accessories are publicly advertised as being available for delivery10 or actually being delivered. These provisions are not violated, how-11 ever, if failure is caused by acts or causes beyond the control of the12 manufacturer or distributor.13 (b) Refuse to disclose to any dealer handling the same line, the manner14 and mode of distribution of that line within this state.15 (c) Obtain money, goods, service, or any other benefit from any other16 person with whom the dealer does business, on account of, or in relation17 to, the transaction between the dealer and other person, other than for18 compensation for services rendered, unless the benefit is promptly ac-19 counted for and transmitted to the dealer.20 (d) Increase prices of new vehicles that the dealer had ordered for21 consumers prior to the dealer's receipt of the written official price22 increase notification. A sales contract signed by a consumer shall23 constitute evidence of each such order, provided that the vehicle is in24 fact delivered to that customer. In the event of manufacturer or dis-25 tributor price reductions or cash rebates paid to the dealer, the amount26 of any reduction or rebate received by a dealer shall be passed on to the27 private retail consumer by the dealer. Price reductions shall apply to28 all vehicles in the dealer's inventory that were subject to the price29 reduction. Price differences applicable to new model or series shall30 not be considered a price increase or price decrease. Price changes31 caused by the addition to a vehicle of required or optional equipment,32 or revaluation of the United States dollar, in the case of foreign-make33 vehicles or components, or an increase in transportation charges due to34 increased rates imposed by a carrier, shall not be subject to the provi-35 sions of this subsection.36 (e) Release to any outside party, except under subpoena or as other-37 wise required by law or in an administrative, judicial or arbitration38 proceeding involving the manufacturer or distributor or dealer, any39 business, financial, or personal information which may be provided from40 time to time by the dealer to the manufacturer or distributor without41 the express written consent of the dealer.42 (f) Deny any dealer the right of free association with any other dealer43 for any lawful purpose.44 (g) Compete with their franchised licensed dealers in this state in the45 sale, lease, or warranty service of new motor vehicles to retail con-46 sumers. However, nothing in this section shall limit or apply to a man-47 ufacturer's or a distributor's fleet sales or leases with a fleet cus-48 tomer that has a designation as such by the manufacturer or distribu-49 tor as long as such sales or leases are conducted with the involvement50

4 of a dealer of the same line make. Nothing in this section shall limit1 or prohibit a manufacturer or distributor from authorizing or assist-2 ing a fleet customer that has a designation as such by the manufacturer3 or distributor to perform warranty service on vehicles owned or oper-4 ated by such fleet customer. It is not a violation of this paragraph for5 a manufacturer or distributor, or an affiliate of a manufacturer or dis-6 tributor, to directly provide an update to or repair of motor vehicle7 software if such update or repair is provided over-the-air at no cost8 or when creating a new line of motor vehicles and using franchised deal-9 ers to sell and service those vehicles. A manufacturer or distributor10 may operate a dealership for a reasonable period not to exceed one (1)11 year without violating this paragraph if such dealership is for sale to12 any qualified independent person at a fair and reasonable price, or in a13 relationship in which an independent person has made a significant in-14 vestment subject to loss in the dealership and can reasonably expect to15 acquire full ownership of that dealership on reasonable terms and con-16 ditions. Upon a showing of good cause by the manufacturer or distribu-17 tor to the department, the period of temporary ownership may be extended18 up to one (1) additional year, resulting in a maximum temporary owner-19 ship period of two (2) years. A manufacturer or distributor with a man-20 ufacturer-owned or distributor-owned dealership operating in Idaho as21 of January 1, 2026, shall be exempt from the provisions of this para-22 graph.23 (h) Unfairly discriminate among its dealers with respect to warranty24 reimbursement.25 (i) Unreasonably withhold consent to the sale, transfer, or exchange of26 the franchise to a qualified buyer capable of being licensed as a dealer27 in this state or to condition the sale, transfer, or exchange of a fran-28 chise agreement upon site control or an agreement to renovate or make29 improvements to a facility, unless required by the technology of a motor30 vehicle being sold at the facility. Provided however, that a voluntary31 acceptance of such conditions by the dealer in writing including but not32 limited to a written agreement for which the dealer has accepted sepa-33 rate and valuable consideration, shall not constitute a violation.34 (j) Fail to respond in writing to a request for consent as specified in35 paragraph (i) of this subsection within sixty (60) days of receipt of a36 written request on the forms, if any, generally utilized by the manufac-37 turer or distributor for those purposes and containing the required in-38 formation. Failure to respond shall be deemed to be consent to the re-39 quest.40 (k) Prevent or attempt to prevent, by contract or otherwise, any dealer41 from changing the executive management control of the dealership unless42 the manufacturer or distributor, having the burden of proof, can show43 that the change of executive management will result in executive man-44 agement or control by a person or persons who are not of good moral char-45 acter or who do not meet reasonable, preexisting and, with considera-46 tion given to the volume of sales and service of the dealership, uni-47 formly applied minimum business experience standards. Where the manu-48 facturer or distributor rejects a proposed change in executive manage-49 ment control, the manufacturer or distributor shall give written notice50

5 of his reasons to the dealer within sixty (60) days of notice to the man-1 ufacturer or distributor by the dealer of the proposed change; other-2 wise, the change in the executive management of the dealership shall be3 presumptively considered approved.4 (l) Terminate, cancel or fail to renew any franchise solely because of5 the death or incapacity of an owner who is not listed in the franchise6 as one on whose expertise and abilities the manufacturer or distributor7 relied in the granting of the franchise.8 (m) Prevent or attempt to prevent the dealer, by written instrument9 or otherwise, from either receiving the fair market value of the deal-10 ership in a sale transaction or from transferring the dealership to a11 spouse or legal heir, as specified in this chapter.12 (n) Engage in any predatory practice or discrimination against any13 dealer.14 (o) Resort to or to use any false or misleading advertisement in the15 conducting of his business as a manufacturer or distributor in this16 state.17 (p) Make any false or misleading statement, either directly or through18 any agent or employee, in order to induce any dealer to enter into any19 agreement or franchise or to take any action that is prejudicial to that20 dealer or his business.21 (q) Require or coerce dealers to participate in local or national ad-22 vertising campaigns or contests or to require or coerce dealers to pur-23 chase promotional or display materials.24 (r) Charge back, deny motor vehicle allocation, withhold payments, or25 take other actions against a dealer, or to condition a franchise agree-26 ment, or renewal of a franchise agreement, or to condition sales, ser-27 vice, parts, or finance incentives upon site control or an agreement to28 renovate or make improvements to a facility unless required by the tech-29 nology of a motor vehicle being sold at the facility. Provided however,30 that a voluntary acceptance of such conditions by the dealer in writing31 including but not limited to a written agreement for which the dealer32 has accepted separate and valuable consideration, shall not constitute33 a violation.34 (s) Charge back, deny motor vehicle allocation, withhold payments, or35 take other actions against a motor vehicle dealer if a motor vehicle36 sold by the motor vehicle dealer is exported from Idaho or the dealer's37 assigned area of responsibility unless the manufacturer, distributor,38 or manufacturer representative proves that the motor vehicle dealer39 knew or reasonably should have known a motor vehicle was intended to40 be exported, which shall operate as a rebuttable presumption that the41 motor vehicle dealer did not have such knowledge. This paragraph does42 not apply if exporting of motor vehicles outside of the state of Idaho is43 provided for by the manufacturer or distributor.44 (t) Withhold or threaten to withhold consent or approval of the sale,45 transfer, exchange, or issuance of a dealer sales and service agreement46 to an otherwise qualified buyer capable of being licensed as a dealer47 in this state or to condition approval of such buyer upon the selling48 dealer executing a release of all claims or similar instrument releas-49 ing or waiving any and all claims the selling dealer has or may have50

6 arising from the franchise relationship with the manufacturer unless1 separate material consideration is paid contemporaneously by the manu-2 facturer to the dealer for such release. Nothing in this section shall3 preclude the application of a manufacturer's reasonable and uniform4 standards and policies.5 (4) It is unlawful for any manufacturer or distributor or any offi-6 cer, agent or representative to coerce, or attempt to coerce, any dealer7 in this state to offer to sell or sell any extended service contract or ex-8 tended maintenance plan that is offered, sold, backed by or sponsored by9 the manufacturer or distributor or to sell, assign or transfer any retail10 installment sales contract, obtained by the dealer in connection with the11 sale by him in this state of new vehicles, manufactured or sold by the man-12 ufacturer or distributor, to a specified finance company or class of such13 companies, or to any other specified person, by any of the acts or means set14 forth, namely by:15 (a) Any statement, suggestion, promise or threat that the manufac-16 turer or distributor will, in any manner, benefit or injure the dealer,17 whether the statement, suggestion, threat or promise is express or im-18 plied or made directly or indirectly;19 (b) Any act that will benefit or injure the dealer;20 (c) Any contract, or any express or implied offer of contract, made21 directly or indirectly to a dealer for handling new vehicles, on the22 condition that the dealer shall offer to sell or sell any extended23 service contract or extended maintenance plan that is offered, sold,24 backed by, or sponsored by the manufacturer or distributor or sell, as-25 sign or transfer his retail installment sales contract in this state to26 a specified finance company or class of such companies, or to any other27 specified person; or28 (d) Any express or implied statement or representation made directly or29 indirectly that the dealer is under any obligation whatsoever to offer30 to sell or sell any extended service contract or extended maintenance31 plan that is offered, sold, backed by, or sponsored by the manufacturer32 or distributor or to sell, assign or transfer any of his retail sales33 contracts, in this state, on new vehicles manufactured or sold by that34 manufacturer or distributor to a finance company or class of companies,35 or other specified person, because of any relationship or affiliation36 between the manufacturer or distributor and a finance company or compa-37 nies, or a specified person or persons.38 (e) Nothing contained in this subsection shall prohibit a manufacturer39 or distributor from offering or providing incentive benefits or bonus40 programs to a retail motor vehicle dealer or prospective retail motor41 vehicle dealer in this state who makes the voluntary decision to offer42 to sell or sell any extended service contract or extended maintenance43 plan offered, sold, backed by or sponsored by the manufacturer or dis-44 tributor to sell, assign or transfer any retail installment sale or45 lease by him in this state of motor vehicles manufactured or sold by the46 manufacturer or distributor to a specified finance company or leasing47 company controlled by or affiliated with the manufacturer or distribu-48 tor.49

7 Any statement, threats, promises, acts, contracts or offers of con-1 tracts, when the effect may be to lessen or eliminate competition or tend to2 create a monopoly, are declared unfair trade practices and unfair methods of3 competition, against the policy of this state, and are unlawful.4 (5) It is unlawful for any manufacturer or distributor or agent or em-5 ployee of a manufacturer or distributor to use a written instrument, agree-6 ment, or waiver to attempt to nullify any of the provisions of this section,7 and such agreement, written instrument or waiver shall be null and void.8 (6) It shall be unlawful, directly or indirectly, to impose unrea-9 sonable restrictions on the dealer relative to the sale, transfer, right10 to renew, termination discipline, noncompetition covenants, site control11 (whether by sublease, collateral pledge of lease, or otherwise), right of12 first refusal to purchase, option to purchase, compliance with subjective13 standards and assertion of legal or equitable rights.14 (7) The provisions of this chapter shall apply to all written franchise15 agreements between a manufacturer or distributor and a dealer, including16 the franchise offering, the franchise agreement, sales of goods, services17 or advertising, leases or mortgages of real or personal property, promises18 to pay, security interests, pledges, insurance contract, advertising con-19 tract, construction or installation contract, servicing contracts and all20 other agreements where the manufacturer or distributor has any direct or21 indirect interest.22 (8)(a) It shall be unlawful for any manufacturer or distributor,23 whether by agreement, program, incentive provision, or provision for24 loss of incentive payments or other benefits, to establish or implement25 a franchise agreement for the sales and leasing of new motor vehicles26 under which the manufacturer or distributor reserves the right to:27 (i) Maintain a website or other electronic or digital means of28 communication for the manufacturer or distributor to negotiate29 binding terms of sale or leasing of new motor vehicles directly30 with the retail buyer or lessee without the involvement of a dealer31 on prices or other substantive terms of sale or leasing of new ve-32 hicles;33 (ii) Retain ownership of new motor vehicles until they are sold or34 leased to the retail buyer or lessee;35 (iii) Except for the sale or lease of a vehicle to a bona fide em-36 ployee or relative of such manufacturer or distributor or in con-37 nection with a replacement or buyback, or to a bona fide employee38 or relative of a dealer under an employee pricing or similar pro-39 gram, consign new motor vehicles to dealers for dealer inventory40 or for sale or lease to a retail buyer or lessee;41 (iv) Negotiate binding terms of sale directly with retail buy-42 ers or lessees of new motor vehicles without the involvement of a43 dealer, provided that displaying on a website or other electronic44 or digital means of communication conditional prices, available45 financing sources, or conditional trade-in values that are not46 binding on a dealer shall not be considered negotiating;47 (v) Enforce or seek to enforce a right in any franchise agreement48 for the manufacturer or distributor to unilaterally amend or mod-49 ify the franchise agreement; or50

8 (vi) Amend or modify or attempt to amend or modify any dealer sales1 and service agreement, including but not limited to the dealer's2 relevant market area if the amendment or modification substan-3 tially and adversely affects the dealer's rights, obligations,4 investment or return on investment, without giving sixty (60) days5 advance written notice of the proposed amendment or modification6 to the dealer.7 (b) Nothing in this subsection shall prevent a manufacturer or distrib-8 utor from:9 (i) Participating in fleet sales or leasing with a fleet customer10 that has a designation as such by the manufacturer or distributor11 as long as such sales or leases are conducted with the involvement12 of a dealer of the same line make;13 (ii) Authorizing or assisting a fleet customer that has a des-14 ignation as such by the manufacturer or distributor to perform15 warranty service on vehicles owned or operated by such fleet cus-16 tomers;17 (iii) Offering, providing, and applying the terms of an employee18 pricing or similar program with participating dealers;19 (iv) Negotiating binding terms of sale relating to the sale or20 lease of a vehicle to a bona fide employee or relative of such manu-21 facturer or distributor;22 (v) Negotiating binding terms of sale relating to the sale or23 lease of a vehicle to a bona fide employee or relative of a fran-24 chised dealer under an employee pricing program or similar pro-25 gram;26 (vi) Negotiating binding terms of sale relating to the sale or27 lease of a vehicle in connection with a vehicle replacement or buy-28 back;29 (vii) Purchasing from a consumer a vehicle in connection with a ve-30 hicle replacement or buyback;31 (viii) Maintaining a website or other electronic or digital means32 of communication if the final selling or leasing price of the new33 vehicle is determined by eligible dealers; or34 (ix) Setting or advertising a manufacturer's suggested retail35 price or lease example pricing based on a manufacturer's suggested36 retail price, special financing, or lease offers.37 (9)(a) Within the sixty (60) day notice period provided for in subsec-38 tion (8)(a)(vi) of this section, the dealer may pursue remedies under39 section 49-1617, Idaho Code, and file with the department and serve upon40 the respondent a petition to determine whether good cause exists for41 permitting the proposed modification. Multiple complaints pertaining42 to the same proposed modification may be consolidated for hearing. The43 proposed modification may not take effect pending the determination44 of any protest filed by a dealer. In making a determination of whether45 there is good cause for permitting a proposed modification of a dealer46 sales and service agreement, including but not limited to a dealer's47 relevant market area, the burden of proof shall be on the manufacturer48 or distributor, except that the burden of proof with regard to the fac-49

9 tor set forth in subparagraph (iii) of this paragraph shall be on the1 dealer. The department shall consider any relevant factor, including:2 (i) The reasons for the proposed modification;3 (ii) Whether the proposed modification is applied to or affects4 all motor vehicle dealers in a nondiscriminatory manner;5 (iii) The degree to which the proposed modification will have6 a substantial and adverse effect on the motor vehicle dealer's7 rights, investment, or return on investment; and8 (iv) Whether the proposed modification is in the public interest.9 (b) With respect to a proposed modification of a dealer's relevant mar-10 ket area the department shall also consider:11 (i) The traffic patterns between consumers and the same line-12 make franchised dealers of the affected manufacturer or distrib-13 utor who are located within the market;14 (ii) The pattern of new vehicle sales and registrations of the af-15 fected manufacturer or distributor within various portions of the16 relevant market area and within the market as a whole;17 (iii) The growth or decline in population, density of population,18 and new car registrations in the market;19 (iv) The presence or absence of natural geographical obstacles or20 boundaries;21 (v) The proximity of census tracts or other geographic units used22 by the affected manufacturer or distributor in determining the23 same line-make dealers' respective relevant market area; and24 (vi) The reasonableness of the change or proposed change to the25 dealer's relevant market area, considering the benefits and harm26 to the petitioning dealer, other same line-make dealers, and the27 manufacturer or distributor.28 (10) It shall be unlawful for any manufacturer or distributor to imple-29 ment a program or policy that coerces or requires the franchisee to install30 direct current fast charging stations for public access or use or any simi-31 lar public-facing infrastructure relating to charging, fueling, or powering32 a vehicle. For purposes of this section, the term "coerce" means the use of33 force or threats to compel a dealer to take a specific action. "Coerce" in-34 cludes threatening to withhold vehicles or parts from a franchisee or charg-35 ing a franchisee a higher price for vehicles or parts on the basis of the36 franchisee refusing, declining, or failing to perform a specific behavior.37 Provided, however, that nothing contained in this subsection shall be deemed38 to prohibit or prevent a manufacturer or distributor from requiring a fran-39 chisee to purchase special tools or equipment, install reasonable charging40 infrastructure, stock reasonable quantities of certain parts, or partici-41 pate in training, reasonable sales and service programs, or policies that42 are reasonably necessary for such franchisee to sell or service any model or43 series of vehicles.44

SECTION 2. An emergency existing therefor, which emergency is hereby45 declared to exist, this act shall be in full force and effect on and after46 July 1, 2026.47