K.S.A. Chapter 8 Article 24

Licensure of Vehicle Sale and Manufacture

Current through end of 2013 legislative session

8-2401            Definitions

8-2402            Declaration of public policy.8-2403            Vehicle dealers required to have licenses; exceptions; supervision by director of vehicles.

8-2404            License required; license fees; bond required, when; place of business required, when; supplemental place of business; manual and examination for salesperson; prohibiting brokering of new and used motor vehicles; exceptions.

8-2405            Insurance required of dealers; limitations on cancellation.

8-2406            Dealer plates; fee; symbols on plates; use of plates.

8-2408            Dealer requirements; reports; records, availability for inspection; disposition of business; exceptions.

8-2409            Temporary vehicle registration permits; cost; display; operation under laden conditions, when.

8-2410            Denial, suspension or revocation of license; grounds; notice and hearing; licensee responsibility for agents; appeals; prohibited acts.

8-2411            Violations; hearing; penalties; appeals.

8-2412            Dealer review board; membership; meetings; compensation and expenses; secretary; attachment to department of revenue.

8-2413            Injunctions; jurisdiction of courts.

8-2414            Cancellation, termination or nonrenewal of franchise agreements between dealers and manufacturers or distributors; cause; hearing; burden of proof; compensation upon termination; effect of noncompliance by manufacturer or distributor.

8-2415            Correction of warranty defects; compensation to dealer; promotional allowances or incentive payments.

8-2416            Sale, transfer or assignment of dealership, notice and limitations; disapproval procedure; duties of manufacturer or distributor; appointment of successor.

8-2417            Jurisdiction over licensees; service of process in secretary of state.

8-2418            Disposition of moneys.

8-2419            Liability of manufacturers for defects in equipment.

8-2420            Act supplemental to vehicle registration laws.

8-2421            Severability.

8-2422            Citation of act.

8-2423            Rules and regulations.

8-2425            Full-privilege license plates; fees; use.

8-2426            Same; unlawful acts; penalties.

8-2428            Dealer review board; duties.

8-2429            Interstate dealer licensing compact.

8-2430            Establishment of additional or relocation of existing new vehicle dealer; procedure; relevant market area.

8-2431            Same; exemption for manufacturers with dispute resolution procedures.

8-2432            Same; act part of vehicle dealers and manufacturers licensing act.

8-2433            Temporary permit for vehicle salesperson.

8-2434            Selling motor vehicles without a license; penalty.

8-2435            Display of motor vehicles at a location other than dealer's place of business; permit.

8-2436            Salvage vehicle pools; registration; requirements.

8-2437            Application of act.

8-2438            Ownership and operation of new vehicle dealership by certain entities prohibited; exceptions.

8-2439            Delivery of motor vehicles to persons in state; who authorized to deliver.

8-2440            Transactions executed outside state; when lemon law applicable.

8-2441            Aiding or abetting violations of act prohibited.

8-2442            Severability.

8-2443            Act supplemental to vehicle dealers and manufacturers licensing act.

 

8-2401. Definitions.

            As used in this act, the following words and phrases shall have the meanings:

            (a) "Vehicle dealer" means any person who: (1) For commission, money or other thing of value is engaged in the business of buying, selling or offering or attempting to negotiate a sale of an interest in vehicles; or

            (2) for commission, money or other thing of value is engaged in the business of buying, selling or offering or attempting to negotiate a sale of an interest in motor vehicles as an auction motor vehicle dealer as defined in (bb); but does not include: (A) Receivers, trustees, administrators, executors, guardians, or other persons appointed by or acting under the judgment or order of any court, or any bank, trustee or lending company or institution which is subject to state or federal regulations as such, with regard to its disposition of repossessed vehicles; (B) public officers while performing their official duties; (C) employees of persons enumerated in provisions (A) and (B), when engaged in the specific performance of their duties as such employees; (D) auctioneers conducting auctions for persons enumerated in provisions (A), (B) or (C); or (E) auctioneers who, while engaged in conducting an auction of tangible personal property for others, offer for sale: (i) Vehicles which have been used primarily in a farm or business operation by the owner offering the vehicle for sale, including all vehicles which qualified for a farm vehicle tag at the time of sale except vehicles owned by a business engaged primarily in the business of leasing or renting passenger cars; (ii) vehicles which meet the statutory definition of antique vehicles; or (iii) vehicles for no more than four principals or households per auction. All sales of vehicles exempted pursuant to provision (E), except truck, truck tractors, pole trailers, trailers and semitrailers as defined by K.S.A. 8-126, and amendments thereto, shall be registered in Kansas prior to the sale.

            (b) "New vehicle dealer" means any vehicle dealer who is a party to an agreement, with a first or second stage manufacturer or distributor, which agreement authorizes the vehicle dealer to sell, exchange or transfer new motor vehicles, trucks, motorcycles, or trailers or parts and accessories made or sold by such first or second stage manufacturer or distributor and obligates the vehicle dealer to fulfill the warranty commitments of such first or second stage manufacturer or distributor.

            (c) "Used vehicle dealer" means any person actively engaged in the business of buying, selling or exchanging used vehicles.

            (d) "Vehicle salesperson" means any person who is employed as a salesperson by a vehicle dealer to sell vehicles.

            (e) "Board" means the vehicle dealer review board created by this act.

            (f) "Director" means the director of vehicles, or a designee of the director.

            (g) "Division" means the division of vehicles of the department of revenue.

            (h) "Vehicle" means every device in, upon or by which any person or property is or may be transported or drawn upon a public highway, and is required to be registered under the provisions of article 1 of chapter 8 of Kansas Statutes Annotated, except that such term shall include micro utility trucks, as defined in K.S.A. 8-126, and amendments thereto, but shall not include motorized bicycles, and such term shall not include manufactured homes or mobile homes. As used herein, the terms "manufactured home" and "mobile home" shall have the meanings ascribed to them by K.S.A. 58-4202, and amendments thereto.

            (i) "Motor vehicle" means any vehicle other than a motorized bicycle, which is self-propelled and is required to be registered under the provisions of article 1 of chapter 8 of Kansas Statutes Annotated, except that such term shall include micro utility trucks, as defined in K.S.A. 8-126, and amendments thereto.

            (j) "Licensor" means the director or division or both.

            (k) "First stage manufacturer" means any person who manufactures, assembles and sells new vehicles to new vehicle dealers for resale in this state.

            (l) "Second stage manufacturer" means any person who assembles, installs or permanently affixes body, cab or special unit equipment to a chassis supplied by a first stage manufacturer, distributor or other supplier and sells the resulting new vehicles to new vehicle dealers for resale in this state.

            (m) "First stage converter" means any person who is engaged in the business of affixing to a chassis supplied by a first stage manufacturer, distributor or other supplier, specially constructed body units to result in motor vehicles used as, but not limited to, buses, wreckers, cement trucks and trash compactors.

            (n) "Second stage converter" means any person who is engaged in the business of adding to, subtracting from or modifying previously assembled or manufactured vehicles and sells the resulting converted vehicles at retail or wholesale.

            (o) "Distributor" means any person who sells or distributes for resale new vehicles to new vehicle dealers in this state or who maintains distributor representatives in this state.

            (p) "Wholesaler" means any person who purchases vehicles for the purpose of resale to a vehicle dealer.

            (q) "Factory branch" means any branch office maintained in this state by a first or second stage manufacturer for the sale of new vehicles to distributors, or for the sale of new vehicles to new vehicle dealers, or for directing or supervising, in whole or in part, its representatives in this state.

            (r) "Distributor branch" means any branch office similar to subsection (q) maintained by a distributor for the same purposes as a factory branch.

            (s) "Factory representative" means a representative employed by a first or second stage manufacturer or factory branch for the purpose of making or promoting the sale of its new vehicles to new vehicle dealers, or for supervising or contacting its new vehicle dealers or prospective new vehicle dealers with respect to the promotion and sale of such vehicles and parts or accessories for the same.

            (t) "Distributor representative" means any representative similar to subsection (s) employed by a distributor or distributor branch for the same purpose as a factory representative.

            (u) "Person" means any natural person, partnership, firm, corporation or association.

            (v) "New motor vehicle" means any motor vehicle which has never been titled or registered and has not been substantially driven or operated.

            (w) "Franchise agreement" means any contract or franchise or any other terminology used to describe the contractual relationship between first or second stage manufacturers, distributors and vehicle dealers, by which:

            (1) A right is granted one party to engage in the business of offering, selling or otherwise distributing goods or services under a marketing plan or system prescribed in substantial part by the other party, and in which there is a community of interest in the marketing of goods or services at wholesale or retail, by lease, agreement or otherwise; and

            (2) the operation of the grantee’s business pursuant to such agreement is substantially associated with the grantor’s trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the grantor or an affiliate of the grantor.

            (x) "Broker" means any person who, for a fee, commission, money, other thing of value, valuable consideration or benefit, either directly or indirectly, arranges or offers to arrange a transaction involving the sale of a vehicle, or is engaged in the business of: (1) Selling or buying vehicles for other persons as an agent, middleman or negotiator; or (2) bringing buyers and sellers of vehicles together, but such term shall not include any person registered as a salvage vehicle pool or any person engaged in a business in which the acts described in this subsection are only incidentally performed or which are performed or authorized within the requirements or scope of any other category of license, or not prohibited, in the manner authorized by the vehicle dealers’ and manufacturers’ licensing act.

            (y) "Salvage vehicle dealer" means any person engaged in the business of buying, selling or exchanging used vehicles and primarily engaged in the business of the distribution at wholesale or retail of used motor vehicle parts and includes establishments primarily engaged in dismantling motor vehicles for the purpose of selling parts.

            (z) "Lending agency" means any person, desiring to be licensed under this act and engaged in the business of financing or lending money to any person to be used in the purchase or financing of a vehicle.

            (aa) "Established place of business" means a building or structure, other than a building or structure all or part of which is occupied or used as a residence, owned either in fee or leased and designated as an office or place to receive mail and keep records and conduct the routine of business. To qualify as an established place of business, there shall be located therein an operable telephone which shall be listed with the telephone company under the name of the licensed business, except that a vehicle dealer who derives at least 50% of such person’s income from operating a farm as a resident thereof, the established place of business may be the farm residence of such vehicle dealer and the operable telephone may be located in such residence when such dealer engages only in vehicles and equipment not required to have vehicle registration to travel on a highway.

            (bb) "Auction motor vehicle dealer" means any person who for commission, money or other thing of value is engaged in an auction of motor vehicles except that the sales of such motor vehicles shall involve only motor vehicles owned by licensed motor vehicle dealers and sold to licensed motor vehicle dealers, except that any auction motor vehicle dealer, registered as such and lawfully operating prior to June 30, 1980, shall be deemed to be and have been properly licensed under this act from and after July 1, 1980. For the purposes of this subsection, an auction is a private sale of motor vehicles where any and all licensed motor vehicle dealers who choose to do so are permitted to attend and offer bids and the private sale of such motor vehicles is to the highest bidder.

            (cc) "Licensee" means any person issued a valid license pursuant to this act.

            (dd) "Dealer" means a vehicle dealer as defined by this act, unless the context otherwise requires.

            (ee) "Insurance company" means any person desiring to be licensed under this act and engaged in the business of writing or servicing insurance related to vehicles.

            (ff) "Supplemental place of business" means a business location other than that of the established place of business of the dealer which may be operated by the dealer on a continuous year-round basis and, for new vehicle dealers, is within the defined area of responsibility in their franchise agreement, and for all other dealers is within the same city or county where the established place of business of the dealer is operated.

            (gg) "Salvage yard" means the place owned or leased and regularly occupied by a person, firm or corporation licensed under the provisions of this act for the principal purpose of engaging in the business of a salvage vehicle dealer. Salvage yard shall include the location where the:

            (1) Products for sale are displayed and offered for sale;

            (2) books and records required for the conduct of the business are maintained;

            (3) records are kept in the normal daily business activity; and

            (4) records are made available for inspection.

            (hh) "Salvage vehicle pool" means any person who as an agent for a third party is primarily engaged in the business of storing, displaying and offering for sale salvage vehicles.

            (ii) "Major component part" means any vehicle part including the front clip, rear clip, doors, frame, chassis, engine, transmission, transaxle, cab, bed and box bearing the public vehicle identification number or engine number, if manufactured prior to 1981; or any vehicle part bearing a derivative of such number.

            (jj) "Recreational motor vehicle" means a recreational vehicle as defined by subsection (f) of K.S.A. 75-1212, and amendments thereto.

            (kk) "Vehicle crusher" means any person, other than a vehicle recycler or a scrap metal recycler, who engages in the business of flattening, crushing or otherwise processing nonrepairable vehicles for recycling. Vehicle crushers include, but are not limited to, persons who use fixed or mobile equipment to flatten or crush nonrepairable vehicles for a vehicle recycler or a scrap metal recycler.

            (ll) "Vehicle recycler" means a person who engages in the business of acquiring, dismantling, removing parts from or destroying nonrepairable vehicles for the primary purpose of reselling the vehicle parts.

            (mm) "Scrap metal recycler" means a person who engages in the business of shredding or otherwise processing nonrepairable vehicles or other scrap metal into prepared grades and whose principal product is scrap iron, scrap steel or nonferrous metallic scrap for sale for remelting purposes.

            (nn) "Nonrepairable vehicle" means any motor vehicle which: (1) Has been damaged, destroyed, wrecked, burned or submerged in water to the extent that such motor vehicle is incapable of safe operation for use on roads or highways and has no resale value except as a source of parts or scrap only; or (2) the owner irreversibly designates as a source of parts

or scrap.

            (oo) "Rebuilder" means a person who is engaged in the business of rebuilding salvage vehicles, as defined in K.S.A. 8-196, and amendments thereto, and selling such rebuilt salvage vehicles.

History: L. 1980, ch. 36, § 1; L. 1981, ch. 48, § 1; L. 1984, ch. 26, § 2; L. 1984, ch. 45, § 1; L. 1985, ch. 54, § 1; L. 1986, ch. 49, § 1; L. 1988, ch. 52, § 1; L. 1988, ch. 51, § 1; L. 1988, ch. 43, § 2; L. 1990, ch. 52, § 1; L. 1991, ch. 33, § 18; L. 1993, ch. 252, § 5; L. 1994, ch. 302, § 3; L. 2008, ch. 167, § 9; L. 2009, ch. 63, § 1, July 1.

8-2402. Declaration of public policy.

            It is hereby declared to be the public policy of this state to provide for fair and impartial regulation of those persons engaged in manufacturing, distributing or selling of vehicles. The provisions of this act which are applicable to such activities shall be administered in such a manner as will continue to promote fair dealing and honesty in the vehicle industry and among those engaged therein without unfair or unreasonable discrimination or undue preference or advantage. It is further declared to be the policy of this state to protect the public interest in the purchase and trade of vehicles, so as to insure protection against irresponsible vendors and dishonest or fraudulent sales practices and to assist, provide and secure a stable, efficient, enforceable and verifiable method for the distribution of vehicles to consumers in the state of Kansas and provide a system of tracking the flow of vehicles and their parts as well as preserving supporting services for consumers purchasing or otherwise acquiring vehicles.

History: L. 1980, ch. 36, § 2; L. 1981, ch. 48, § 2; L. 1990, ch. 52, § 2; L. 1991, ch. 33, § 19; July 1.

8-2403. Vehicle dealers required to have licenses; exceptions; supervision by director of vehicles.

            (a) No person shall engage in the business of a vehicle dealer unless such person has complied with the applicable provisions of this act. The director shall issue licenses provided for by this act and shall have supervision over the licensees hereunder in respect to all the provisions of this act.

            (b) This act shall not apply to:

            (1) Vehicle dealers or manufacturers dealing exclusively in farm trailers or utility or boat trailers having a gross weight of 2,000 pounds or less and which are not required by law to be registered; or

            (2) charitable organizations, which are exempt from federal income taxation pursuant to section 501(c)(3) and are eligible recipients of charitable contributions pursuant to section 170(c)(2) of the federal internal revenue code, selling motor vehicles at a charitable auction.

History: L. 1980, ch. 36, § 3; L. 1981, ch. 48, § 3; L. 1991, ch. 33, § 20; L. 1994, ch. 299, § 3; July 1.

8-2404. License required; license fees; bond required, when; place of business required, when; supplemental place of business; manual and examination for salesperson; prohibiting brokering of new and used motor vehicles; exceptions.

            (a) No vehicle dealer shall engage in business in this state without obtaining a license as required by this act. Any vehicle dealer holding a valid license and acting as a vehicle salesperson shall not be required to secure a salesperson's license.

            (b) No first stage manufacturer, second stage manufacturer, factory branch, factory representative, distributor branch or distributor representative shall engage in business in this state without a license as required by this act, regardless of whether or not an office or other place of business is maintained in this state for the purpose of conducting such business.

            (c) An application for a license shall be made to the director and shall contain the information provided for by this section, together with such other information as may be deemed reasonable and pertinent, and shall be accompanied by the required fee. The director may require in the application, or otherwise, information relating to the applicant's solvency, financial standing, or other pertinent matter commensurate with the safeguarding of the public interest in the locality in which the applicant proposes to engage in business, all of which may be considered by the director in determining the fitness of the applicant to engage in business as set forth in this section. The director may require the applicant for licensing to appear at such time and place as may be designated by the director for examination to enable the director to determine the accuracy of the facts contained in the written application, either for initial licensure or renewal thereof. Every application under this section shall be verified by the applicant.

            (d) All licenses shall be granted or refused within 30 days after application is received by the director. All licenses, except licenses issued to salespersons, shall expire, unless previously suspended or revoked, on December 31 of the calendar year for which they are granted, except that where a complaint respecting the cancellation, termination or nonrenewal of a sales agreement is in the process of being heard, no replacement application shall be considered until a final order is issued by the director. Applications for renewals, except for renewals of licenses issued to salespersons, received by the director after February 15 shall be considered as new applications. All salespersons' licenses issued on or after January 1, 1987, shall expire on June 30, 1988, and thereafter shall expire, unless previously suspended or revoked, on June 30 of the calendar year for which they are granted. Applications for renewals of salespersons' licenses received by the director after July 15 shall be considered as new applications. All licenses for supplemental places of business existing or issued on or after January 1, 1994, shall expire on December 31, 1994, unless previously expired, suspended or revoked, and shall thereafter expire on December 31 of the calendar year for which they are granted, unless previously suspended or revoked.

            (e) License fees for each calendar year, or any part thereof shall be as follows:

            (1) For new vehicle dealers, $75;

            (2) for distributors, $75;

            (3) for wholesalers, $75;

            (4) for distributor branches, $75;

            (5) for used vehicle dealers, $75;

            (6) for first and second stage manufacturers, $225 plus $75 for each factory branch in this state;

            (7) for factory representatives, $50;

            (8) for distributor representatives, $50;

            (9) for brokers, $75;

            (10) for lending agencies, $50;

            (11) for first and second stage converters, $50;

            (12) for salvage vehicle dealers, $75;

            (13) for auction motor vehicle dealers, $75;

            (14) for vehicle salesperson, $25;

            (15) for insurance companies, $75;

            (16) for vehicle crusher, $75;

            (17) for vehicle recycler, $75;

            (18) for scrap metal recycler, $75;

            (19) for rebuilders, $75; and

            (20) for salvage vehicle pool, $75.

            Any new vehicle dealer who is also licensed as a used vehicle dealer shall be required to pay only one $75 fee for both licenses.

            (f) Dealers may establish approved supplemental places of business within the same county of their licensure or, with respect to new vehicle dealers, within their area of responsibility as defined in their franchise agreement. Those doing so shall be required to pay a supplemental license fee of $35. In addition to any other requirements, new vehicle dealers seeking to establish supplemental places of business shall also comply with the provisions of K.S.A. 8-2430 through 8-2432, and amendments thereto. A new vehicle dealer establishing a supplemental place of business in a county other than such dealer’s county of licensure but within such dealer’s area of responsibility as defined in such dealer’s franchise agreement shall be licensed only to do business as a new motor vehicle dealer in new motor vehicles at such supplemental place of business. Original inspections by the division of a proposed established place of business shall be made at no charge except that a$30 fee shall be charged by the division for each additional inspection the division must make of such premises in order to approve the same.

            (g) The license of all persons licensed under the provisions of this act shall state the address of the established place of business, office, branch or supplemental place of business and must be conspicuously displayed therein. The director shall endorse a change of address on a license without charge if: (1) The change of address of an established place of business, office, branch or supplemental place of business is within the same county; or (2) the change of address of a supplemental place of business, with respect to a new vehicle dealer, is within such dealer's area of responsibility as defined in their franchise agreement. A change of address of the established place of business, office or branch to a different county shall require a new license and payment of the required fees but such new license and fees shall not be required for a change of address of a supplemental place of business, with respect to a new vehicle dealer, to a different county but within the dealer's area of responsibility as defined in their franchise agreement.

            (h) Every salesperson, factory representative or distributor representative shall carry on their person a certification that the person holds a valid state license. The certification shall name the person's employer and shall be displayed upon request. An original copy of the state license for a vehicle salesperson shall be mailed or otherwise delivered by the division to the employer of the salesperson for public display in the employer's established place of business. When a salesperson ceases to be employed as such, the former employer shall mail or otherwise return the original copy of the employee's state license to the division. A salesperson, factory representative or distributor representative who terminates employment with one employer may file an application with the director to transfer the person's state license in the name of another employer. The application shall be accompanied by a $12 2 transfer fee. A salesperson, factory representative or distributor representative who terminates employment, and does not transfer the state license, shall mail or otherwise return the certification that the person holds a valid state license to the division.

            (i) If the director has reasonable cause to doubt the financial responsibility or the compliance by the applicant or licensee with the provisions of this act, the director may require the applicant or licensee to furnish and maintain a bond in such form, amount and with such sureties as the director approves, but such amount shall be not less than $5,000 nor more than $20,000, conditioned upon the applicant or licensee complying with the provisions of the statutes applicable to the licensee and as indemnity for any loss sustained by a retail or wholesale buyer or seller of a vehicle by reason of any act by the licensee constituting grounds for suspension or revocation of the license. Every applicant or licensee who is or applies to be a used vehicle dealer or a new vehicle dealer shall furnish and maintain a bond in such form, amount and with such sureties as the director approves, conditioned upon the applicant or licensee complying with the provisions of the statutes applicable to the licensee and as indemnity for any loss sustained by a retail or wholesale buyer or seller of a vehicle by reason of any act by the licensee in violation of any act which constitutes grounds for suspension or revocation of the license. The amount of such bond shall be as follows: (1) For any new applicant $30,000; or (2) for any current licensee, $15,000, until the renewal date of the existing bond, then $30,000, except that on and after January 1, 2003, the amount of such bond shall be $30,000. To comply with this subsection, every bond shall be a corporate surety bond issued by a company authorized to do business in the state of Kansas and shall be executed in the name of the state of Kansas for the benefit of any aggrieved retail or wholesale buyer or seller of a vehicle . The aggregate liability of the surety for all breaches of the conditions of the bond in no event shall exceed the amount of such bond. The surety on the bond shall have the right to cancel the bond by giving 30 days' notice to the director, and thereafter the surety shall be relieved of liability for any breach of condition occurring after the effective date of cancellation. Bonding requirements shall not apply to first or second stage manufacturers, factory branches, factory representatives or salespersons. Upon determination by the director that a judgment from a Kansas court of competent jurisdiction is a final judgment and that the judgment resulted from an act in violation of this act or would constitute grounds for suspension, revocation, refusal to renew a license or administrative fine pursuant to K.S.A. 8-2411, and amendments thereto, the proceeds of the bond on deposit or in lieu of bond provided by subsection (j), shall be paid. The determination by the director under this subsection is hereby specifically exempted from the Kansas administrative procedure act (K.S.A. 77-501 through 77-549, and amendments thereto,) and the Kansas judicial review act (K.S.A. 77-601 through 77-627, and amendments thereto). Any proceeding to enforce payment against a surety following a determination by the director shall be prosecuted by the judgment creditor named in the final judgment sought to be enforced. Upon a finding by the court in such enforcement proceeding that a surety has wrongfully failed or refused to pay, the court shall award reasonable attorney fees to the judgment creditor.

            (j) An applicant or licensee may elect to satisfy the bonding requirements of subsection (i) by depositing with the state treasurer cash, negotiable bonds of the United States or of the state of Kansas or negotiable certificates of deposit of any bank organized under the laws of the United States or of the state of Kansas. On or after January 1, 2003, the amount of cash, negotiable bonds of the United States or of the state of Kansas or negotiable certificates of deposit of any bank organized under the laws of the United States or of the state of Kansas deposited with the state treasurer shall be in an amount of no less than $30,000. When negotiable bonds or negotiable certificates of deposit have been deposited with the state treasurer to satisfy the bonding requirements of subsection (i), such negotiable bonds or negotiable certificates of deposit shall remain on deposit with the state treasurer for a period of not less than two years after the date of delivery of the certificate of title to the motor vehicle which was the subject of the last motor vehicle sales transaction in which the licensee engaged prior to termination of the licensee's license. In the event a licensee elects to deposit a surety bond in lieu of the negotiable bonds or negotiable certificates of deposit previously deposited with the state treasurer, the state treasurer shall not release the negotiable bonds or negotiable certificates of deposits until at least two years after the date of delivery of the certificate of title to the motor vehicle which was the subject of the last motor vehicle sales transaction in which the licensee engaged prior to the date of the deposit of the surety bond. The cash deposit or market value of any such securities shall be equal to or greater than the amount of the bond required for the bonded area and any interest on those funds shall accrue to the benefit of the depositor.

            (k) No license shall be issued by the director to any person to act as a new or used dealer, wholesaler, broker, salvage vehicle dealer, auction motor vehicle dealer, second stage manufacturer, first stage converter, second stage converter or distributor unless the applicant for the vehicle dealer's license maintains an established place of business which has been inspected and approved by the division. First stage manufacturers, factory branches, factory representatives, distributor branches, distributor representatives and lending agencies are not required to maintain an established place of business to be issued a license.

            (l) Dealers required under the provisions of this act to maintain an established place of business shall own or have leased and use sufficient lot space to display vehicles at least equal in number to the number of dealer license plates the dealer has had assigned.

            (m) A sign with durable lettering at least 10 inches in height and easily visible from the street identifying the established place of business shall be displayed by every vehicle dealer. Notwithstanding the other provisions of this subsection, the height of lettering of the required sign may be less than 10 inches as necessary to comply with local zoning regulations.

            (n) If the established or supplemental place of business or lot is zoned, approval must be secured from the proper zoning authority and proof that the use complies with the applicable zoning law, ordinance or resolution must be furnished to the director by the applicant for licensing.

            (o) An established or supplemental place of business, otherwise meeting the requirements of this act may be used by a dealer to conduct more than one business, provided that suitable space and facilities exist therein to properly conduct the business of a vehicle dealer.

            (p) If a supplemental place of business is not operated on a continuous, year-round basis, the dealer shall give the department 15 days' notice as to the dates on which the dealer will be engaged in business at the supplemental place of business.

            (q) Any vehicle dealer selling, exchanging or transferring or causing to be sold, exchanged or transferred new vehicles in this state must satisfactorily demonstrate to the director that such vehicle dealer has a bona fide franchise agreement with the first or second stage manufacturer or distributor of the vehicle, to sell, exchange or transfer the same or to cause to be sold, exchanged or transferred.

            No person may engage in the business of buying, selling or exchanging new motor vehicles, either directly or indirectly, unless such person holds a license issued by the director for the make or makes of new motor vehicles being bought, sold or exchanged, or unless a person engaged in such activities is not required to be licensed or acts as an employee of a licensee and such acts are only incidentally performed. For the purposes of this section, engaged in the business of buying, selling or exchanging new motor vehicles, either directly or indirectly, includes: (1) Displaying new motor vehicles on a lot or showroom; (2) advertising new motor vehicles, unless the person's business primarily includes the business of broadcasting, printing, publishing or advertising for others in their own names; or (3) regularly or actively soliciting or referring buyers for new motor vehicles.

            (r) No person may engage in the business of buying, selling or exchanging used motor vehicles, either directly or indirectly, unless such person holds a license issued by the director for used motor vehicles being bought, sold or exchanged, or unless a person engaged in such activities is not required to be licensed or acts as an employee of a licensee and such acts are only incidentally performed. For the purposes of this section, engaged in the business of buying, selling or exchanging used motor vehicles, either directly or indirectly, includes: (1) Displaying used motor vehicles on a lot or showroom; (2) advertising used motor vehicles, unless the person's business primarily includes the business of broadcasting, printing, publishing or advertising for others in their own names; or (3) regularly or actively soliciting buyers for used motor vehicles.

            (s) The director of vehicles shall publish a suitable Kansas vehicle salesperson's manual. Before a vehicle salesperson's license is issued, the applicant for an original license or renewal thereof shall be required to pass a written examination based upon information in the manual.

            (t) No new license shall be issued nor any license renewed to any person to act as a salvage vehicle dealer until the division has received evidence of compliance with the junkyard and salvage control act as set forth in K.S.A. 68-2201 et seq., and amendments thereto.

            (u) On and after the effective date of this act, no person shall act as a broker in the advertising, buying or selling of any new or used motor vehicle. Nothing herein shall be construed to prohibit a person duly licensed under the requirements of this act from acting as a broker in buying or selling a recreational vehicle as defined by subsection (f) of K.S.A. 75-1212, and amendments thereto, when the recreational vehicle subject to sale or purchase is a used recreational vehicle which has been previously titled and independently owned by another person for a period of 45 days or more, or is a new or used recreational vehicle repossessed by a creditor holding security in such vehicle.

            (v) Nothing herein shall be construed to prohibit a person not otherwise required to be licensed under this act from selling such person's own vehicle as an isolated and occasional sale.

History: L. 1980, ch. 36, § 4; L. 1980, ch. 28, § 1; L. 1981, ch. 48, § 4; L. 1982, ch. 49, § 1; L. 1983, ch. 43, § 1; L. 1984, ch. 46, § 1; L. 1985, ch. 54, § 2; L. 1986, ch. 50, § 1; L. 1987, ch. 52, § 1; L. 1988, ch. 52, § 2; L. 1989, ch. 46, § 1; L. 1990, ch. 52, § 3; L. 1991, ch. 33, § 21; L. 1992, ch. 44, § 2; L. 1993, ch. 252, § 6; L. 1994, ch. 302, § 4; L. 2001, ch. 138, § 1; L. 2002, Ch. 102, § 1; L. 2009, ch. 63, § 4, L. 2010, ch. 17, § 19, July 1.

8-2405. Insurance required of dealers; limitations on cancellation.

            No dealer's license shall be issued or renewed unless the applicant or holder of the license shall have on file with the division an approved insurance policy, issued by an insurance carrier authorized to transact business within the state of Kansas. The term of the policy shall be continuous and shall remain in full force and effect until canceled under proper notice. All policies must be issued in the name of the holder or applicant for the vehicle dealer's license and shall provide public liability and property damage insurance for the operation of any vehicle by prospective purchasers, owned or being offered for sale by the dealer when being operated by the owner or seller, the seller's agent, servants, employees, prospective customers or other persons. The limits of liability shall correspond to the amount required by law in this state for bodily injury or death of any one person, bodily injury or death in any one accident and property damage. Such insurance may not be cancelled unless 30 days' notice by the insurance carrier has been given in writing to the director. Upon the effective date of cancellation of any insurance policy required under this section, the license to engage in business as a dealer shall be void.

History: L. 1980, ch. 36, § 5; L. 1981, ch. 48, § 5; L. 1983, ch. 44, § 1; L. 1991, ch. 33, § 22; July 1.

8-2406. Dealer plates; fee; symbols on plates; use of plates.

            (a) The annual fee for the first dealer license plate is $275, and the annual fee for additional dealer license plates shall be an amount equal to the amount required to register a passenger vehicle having a gross weight of less than 4,500 pounds, except that the annual fee for dealer license plates used by trailer dealers on trailers which they have purchased or own and are holding for resale shall be $25 for each plate. To determine the number of dealer license plates the dealer needs, the director may base the decision on the dealer's past sales, inventory and any other pertinent factors as the director may determine. After the end of the first year of licensure as a dealer, not more than one dealer license plate shall be issued to any dealer who has not reported to the division the sale of at least five motor vehicles in the preceding year. There shall be no refund of fees for dealer license plates in the event of suspension, revocation or voluntary cancellation of a license. The director is hereby authorized to designate by identifying symbols on a dealer's license plate the type of dealer's license that the person has been issued. If a dealer has an established place of business in more than one county, such dealer shall secure a separate and distinct dealer's license and dealer license plates for each established place of business.

            (b) New motor vehicle dealers and used motor vehicle dealers may authorize use of dealer license plates assigned to such motor vehicle dealers as follows:

            (1) The licensed motor vehicle dealer and such dealer's spouse;

            (2) the sales manager and all other sales personnel when such manager and sales personnel are properly licensed in Kansas, except that no dealer license plate shall be assigned to sales personnel who are working at the established place of business of the dealer less than 20 hours per week;

            (3) any employee of such motor vehicle dealer when the use thereof is directly connected to a particular business transaction of such motor vehicle dealer;

            (4) the customer when operating a motor vehicle in connection with negotiations to purchase such motor vehicle or during a demonstration of such motor vehicle;

            (5) any school district and any accredited nonpublic school which has entered into an agreement with a dealer to use a motor vehicle as a driver training motor vehicle, as defined in K.S.A. 72-5015, and amendments thereto, in an approved driver training course.

            (c) A wholesaler dealer may authorize the use of dealer license plates on vehicles purchased by the wholesaler for resale to a retail vehicle dealer as follows:

            (1) To transport or operate a vehicle to or from a licensed retail or wholesale vehicle dealer for the purpose of buying, selling, or offering or attempting to negotiate a sale of the vehicle to a licensed vehicle dealer;

            (2) to deliver a vehicle purchased from the wholesale vehicle dealer to a purchasing vehicle dealer.

            (d) Salvage vehicle dealers may use dealer license plates only on vehicles which they have purchased for salvage, including dismantling, disassembling or recycling.

            (e) Insurance companies may use dealer license plates only on vehicles purchased or acquired for salvage in the course of business of the insurance company.

            (f) Lending agencies may use dealer license plates only on vehicles which they have repossessed or are holding for disposition due to repossession.

            (g) Trailer dealers may use dealer license plates only on trailers which they have purchased or own and are holding for resale.

            (h) Brokers are not entitled to be assigned or to use any dealer license plates.

            (i) Except as provided above, dealer license plates shall be used only in accordance with the provisions of K.S.A. 8-136, and amendments thereto. This subsection (i) does not apply to K.S.A. 8-2425, and amendments thereto, or full-privilege license plates or dealer-hauler full-privilege trailer license plates issued thereunder.

History: L. 1980, ch. 36, § 6; L. 1981, ch. 48, § 6; L. 1985, ch. 54, § 3; L. 1986, ch. 51, § 1; L. 1986, ch. 49, § 2; L. 1986, ch. 52, § 1; L. 1989, ch. 209, § 26; L. 1991, ch. 33, § 23; L. 2009, ch. 36, § 1, July 1.

8-2408. Dealer requirements; reports; records, availability for inspection; disposition of business; exceptions.

            Except as hereinafter provided, every person licensed as a dealer under provisions of this act shall:

            (a) On or before the 20th day of each month, file a monthly report, on a form prescribed and furnished by the division of vehicles, listing all sales or transfers, except sales or transfers by a first or second stage manufacturer to a vehicle dealer of new or used vehicles, including the name and address of the purchaser or transferee, date of sale, the serial or identification number of the vehicle, and such other information as the division may require.

            (b) Salvage vehicle dealers, vehicle crusher, vehicle recycler, rebuilder, scrap metal recycler and salvage vehicle pool shall, in addition to their monthly sales report for used vehicles, if applicable, on or before the 20th day of each month file a monthly report on a form prescribed and furnished by the division, listing all vehicles for which the major component part containing the vehicle identification number or engine number if manufactured prior to 1981, has been disposed of or sold. The certificate of title or transfer certificate for all vehicles listed must accompany the monthly report.

            (c) Make available during regular business hours to any employee of the division or any member of law enforcement for the purpose of investigation or inspection, all records concerning vehicles purchased, sold or exchanged during the preceding 12 months, including certificates of title on all vehicles owned by the dealership, except those titles surrendered pursuant to subsection (b).

            (d) Whenever a dealer sells or otherwise disposes of such dealer's business, or for any reason suspends or goes out of business as a dealer, such dealer shall notify the division and return the dealer's license and dealer plates, and the division upon receipt of such notice and plates shall cancel the dealer's license, except that such dealer may, upon payment of 50% of the annual fee to the division, have the license and dealer plates assigned to the purchaser of the business.

            (e) In addition to the requirements of subsection (a), any dealer paying a commission or fee to a broker shall report to the division, on the monthly sales report, the name of the broker and the broker's license number.

            (f) Dealers, licensed as brokers must in addition to the requirements of subsection (a) include on the monthly sales reports, the name of the seller, the transferor or dealer that owns the vehicle and whether the seller or the purchaser paid the broker's fee or commission.

            (g) Lending agencies licensed under this act, which sell two or less repossessed vehicles a month, shall not be required to file the monthly reports under subsection (a), except that such lending agencies shall report annually, on a form prescribed and furnished by the division, the total number of sales or transfers of such vehicles.

History: L. 1980, ch. 36, § 8; L. 1981, ch. 48, § 7; L. 1988, ch. 53, § 1; L. 1991, ch. 33, § 24; L. 1994, ch. 302, § 5; L. 2009, ch. 63, § 5, July 1.

8-2409. Temporary vehicle registration permits; cost; display; operation under laden conditions, when.

            (a) Any dealer may purchase from the division of vehicles sixty-day temporary registration permits, valid for 60 days at a cost of $3 each. Such dealer shall have completed the application and permit as required by the division. Such registration shall not extend the date when registration fees are due, but shall be valid registration for a period of 60 days from date of issuance. The dealer upon presentation of evidence of ownership in the applicant and evidence that the sales tax has been paid, if due, shall issue a sticker or paper registration as determined by the division. No dealer, or county treasurer, as authorized by K.S.A. 8-143, and amendments thereto, shall issue more than one sixty-day temporary registration permit to the purchaser of a vehicle.

            (b) The division of vehicles may deny any dealer the authority to purchase sixty-day temporary permits if the vehicle dealer is delinquent in monthly sales reports to the division for two months or more or if the vehicle dealer is found to have issued more than one sixty-day permit to the purchaser of a vehicle.

            (c) The temporary registration authorized by this section shall entitle a truck, truck tractor or any combination of truck or truck tractor and any type of trailer or semitrailer to be operated under laden conditions.

History: L. 1980, ch. 36, § 9; L. 1983, ch. 45, § 1; L. 1984, ch. 31, § 3; L. 1988, ch. 52, § 3; L. 1989, ch. 209, § 27; L. 2010, ch, 71, § 1; L. 2012, ch. 130, § 6; L. 2013, ch. 8, § 6; July 1.

8-2410. Denial, suspension or revocation of license; grounds; notice and hearing; licensee responsibility for agents; appeals; prohibited acts.

            (a) A license may be denied, suspended or revoked or a renewal may be refused by the director on any of the following grounds:

            (1) Proof of financial unfitness of the applicant;

            (2) material false statement in an application for a license;

            (3) filing a materially false or fraudulent tax return as certified by the director of taxation;

            (4) negligently failing to comply with any applicable provision of this act or any applicable rule or regulation adopted pursuant thereto;

            (5) knowingly defrauding any retail buyer to the buyer’s damage;

            (6) negligently failing to perform any written agreement with any buyer;

            (7) failure or refusal to furnish and keep in force any required bond;

            (8) knowingly making a fraudulent sale or transaction;

            (9) knowingly engaging in false or misleading advertising;

            (10) willful misrepresentation, circumvention or concealment, through a subterfuge or device, of any material particulars, or the nature thereof, required by law to be stated or furnished to the retail buyer;

            (11) negligent use of fraudulent devices, methods or practices in contravention of law with respect to the retaking of goods under retail installment contracts and the redemption and resale of such goods;

            (12) knowingly violating any law relating to the sale, distribution or financing of vehicles;

            (13) being a first or second stage manufacturer of vehicles, factory branch, distributor, distributor or factory representative, officer, agent or any representative thereof, who has:

                        (A) Required any new vehicle dealer to order or accept delivery of any new motor vehicle, part or accessory of such part, equipment or any other commodity not required by law, or not necessary for the repair or service, or both, of a new motor vehicle which was not ordered by the new vehicle dealer;

                        (B) unfairly, without due regard to the equities of the vehicle dealer, and without just provocation, canceled, terminated or failed to renew a franchise agreement with any new vehicle dealer; or

                        (C) induced, or has attempted to induce, by coercion, intimidation or discrimination, any vehicle dealer to involuntarily enter into any franchise agreement with such first or second stage manufacturer, factory branch, distributor, or any representative thereof, or to do any other act to a vehicle dealer which may be deemed a violation of this act, or the rules and regulations adopted or orders promulgated under authority of this act, by threatening to cancel or not renew a franchise agreement existing between such parties;

            (14) being a first or second stage manufacturer, or distributor who for the protection of the buying public fails to specify in writing the delivery and preparation obligations of its vehicle dealers prior to delivery of new vehicles to new vehicle dealers. A copy of such writing shall be filed with the division by every licensed first or second stage manufacturer of vehicles and the contents thereof shall constitute the vehicle dealer’s only responsibility for product liability as between the vehicle dealer and the first or second stage manufacturer. Any mechanical, body or parts defects arising from any express or implied warranties of the first or second stage manufacturer shall constitute the product or warranty liability of the first or second stage manufacturer. The first or second stage manufacturer shall reasonably compensate any authorized vehicle dealer for the performance of delivery and preparation obligation;

            (15) being a first or second stage manufacturer of new vehicles, factory branch or distributor who fails to supply a new vehicle dealer with a reasonable quantity of new vehicles, parts and accessories, in accordance with the franchise agreement. It shall not be deemed a violation of this act if such failure is attributable to factors reasonably beyond the control of such first or second stage manufacturer, factory branch or distributor;

            (16) knowingly used or permitted the use of dealer plates contrary to law;

            (17) has failed or refused to permit an agent of the division, during the licensee’s regular business hours, to examine or inspect such dealer’s records pertaining to titles and purchase and sale of vehicles;

            (18) has failed to notify the division within 10 days of dealer’s plates that have been lost, stolen, mutilated or destroyed;

            (19) has failed or refused to surrender their dealer’s license or dealer’s plates to the division or its agent upon demand;

            (20) has demonstrated that such person is not of good character and reputation in the community in which the dealer resides;

            (21) has, within five years immediately preceding the date of making application, been convicted of a felony or any crime involving moral turpitude, or has been adjudged guilty of the violations of any law of any state or the United States in connection with such person’s operation as a dealer or salesperson;

            (22) has cross-titled a title to any purchaser of any vehicle. Cross- titling shall include, but not by way of limitation, a dealer or broker or the authorized agent of either selling or causing to be sold, exchanged or transferred any vehicle and not showing a complete chain of title on the papers necessary for the issuance of title for the purchaser. The selling dealer’s name must appear on the assigned first or second stage manufacturer’s certificate of origin or reassigned certificate of title;

            (23) has changed the location of such person’s established place of business or supplemental place of business prior to approval of such change by the division;

            (24) having in such person’s possession a certificate of title which is not properly completed, otherwise known as an "open title";

            (25) doing business as a vehicle dealer other than at the dealer’s established or supplemental place of business, with the exception that dealers selling new recreational vehicles may engage in business at other than their established or supplemental place of business for a period not to exceed 15 days;

            (26) any violation of K.S.A. 8-126 et seq., and amendments thereto, in connection with such person’s operation as a dealer;

            (27) any violation of K.S.A. 8-116, and amendments thereto;

            (28) any violation of K.S.A. 21-5835, and amendments thereto;

            (29) any violation of K.S.A. 79-1019, 79-3294 et seq., or 79-3601 et seq., and amendments thereto;

            (30) failure to provide adequate proof of ownership for motor vehicles in the dealer’s possession;

            (31) being a first or second stage manufacturer who fails to provide the director of property valuation all information necessary for vehicle identification number identification and determination of vehicle classification at least 90 days prior to release for sale of any new make, model or series of vehicles; or

            (32) displaying motor vehicles at a location other than at the dealer’s established place of business or supplemental place of business without obtaining the authorization required in K.S.A. 8-2435, and amendments thereto.

            (b) In addition to the provisions of subsection (a), and notwithstanding the terms and conditions of any franchise agreement, including any policy, bulletin, practice or guideline with respect thereto or performance thereunder, no first or second stage manufacturer of vehicles, factory branch, distributor, distributor or factory representative, officer or agent or any representative thereof, or any other person may do or cause to be done any of the following acts or practices referenced in this subsection, all of which are also declared to be a violation of the vehicle dealers and manufacturers licensing act, and amendments thereto:

            (1) Through the use of a written instrument or otherwise, unreasonably fail or refuse to offer to its same line-make new vehicle dealers all models manufactured for that line-make, or unreasonably require a dealer to:

                        (A) Pay any extra fee;

                        (B) purchase unreasonable advertising displays or other materials; or

                        (C) remodel, renovate or recondition the dealer’s existing facilities as a prerequisite to receiving a model or series of vehicles. The provisions of this subsection shall not apply to manufacturers of recreational vehicles;

            (2) require a change in the capital structure of the new vehicle dealership, or the means by or through which the dealer finances the operation of the dealership, if the dealership at all times meets any reasonable capital standards determined by the manufacturer and in accordance with uniformly applied criteria;

            (3) discriminate unreasonably among competing dealers of the same line-make in the sale of vehicles or availability of incentive programs or sales promotion plans or other similar programs, unless justified by obsolescence;

            (4) unless required by subpoena or as otherwise compelled by law:

                        (A) Require a new vehicle dealer to release, convey or otherwise provide customer information if to do so is unlawful, or if the customer objects in writing to doing so, unless the information is necessary for the first or second stage manufacturer of vehicles, factory branch or distributor to meet its obligations to consumers or the new vehicle dealer, including vehicle recalls or other requirements imposed by state or federal law; or

                        (B) release to any unaffiliated third party any customer information which has been provided by the dealer to the manufacturer;

            (5) unless the parties have reached a voluntary agreement where separate and adequate consideration has been offered and accepted in exchange for altering or foregoing the following limitations, through the use of written instrument, or otherwise:

                        (A) Prohibit or prevent a dealer from acquiring, adding or maintaining a sales or service operation for another line-make at the same or expanded facility at which the dealership is located if the prohibition or prevention of such arrangements would be unreasonable in light of all existing circumstances including, but not limited to, debt exposure, cost, return on investment, the dealer’s and manufacturer’s business plans and other financial and economic conditions and considerations;

                        (B) require a dealer to establish or maintain exclusive facilities, personnel or display space if the imposition of the requirement would be unreasonable in light of all existing circumstances, including, but not limited to, debt exposure, cost, return on investment, the dealer’s and manufacturer’s business plans and other financial and economic conditions and considerations;

                        (C) to require a dealer to build or relocate and build new facilities, or make a material alteration, expansion or addition to any dealership facility, unless the requirement is reasonable in light of all existing conditions, including, but not limited to, debt exposure, cost, return on investment, the dealer’s and manufacturer’s business plans and other financial and economic conditions and considerations;

            (6) through the use of written instrument, or otherwise, require, coerce or force a dealer to underutilize its facilities by requiring the dealer to exclude or remove operations for the display, sale or service of any vehicle for which the dealer has a franchise agreement, except that in light of all existing circumstances the dealer must comply with reasonable facilities requirements. The requirement for a dealer to meet reasonable facilities requirements shall not include any requirement that a dealer establish or maintain exclusive facilities. In the event a dealer decides to add an additional franchise agreement to sell another line-make of new vehicles of a different first or second stage manufacturer or distributor from that currently sold in its existing facility, it shall be a rebuttable presumption that the decision to do so is reasonable. Any dealer adding a franchise agreement for an existing facility shall provide 60 days written notice of its intent to those other parties to franchise agreements it may have. The other party must respond to such notice within 60 days by requesting a hearing before the director in accordance with K.S.A. 8-2411, and amendments thereto. Consent shall be deemed to have been given approving the addition of the line-make if no hearing is timely requested. A party objecting to the addition shall have the burden to overcome such presumption by a preponderance of the evidence;

            (7) (A) through the use of written instrument, or otherwise, directly or indirectly condition the awarding of a franchise agreement to a prospective dealer, the addition of a line-make or franchise agreement to an existing dealer, the renewal of a franchise agreement, the approval of a dealer or facility relocation, the acquisition of a franchise agreement or the approval of a sale or transfer of a franchise agreement or other arrangement on the willingness of a dealer or a prospective dealer to enter into a site control agreement or exclusive use agreement as defined in this subsection;

            (B) as used in this paragraph, "site control agreement" and "exclusive use agreement" include any agreement by or required by the first or second stage manufacturer of vehicles, factory branch or distributor ("manufacturer parties" in this paragraph) that has the effect of either:

                        (i) Requiring that the dealer establish or maintain exclusive dealership facilities in violation of the dealer and manufacturers licensing act;

                        (ii) restricting the ability of the dealer, or the ability of the dealer’s lessor in the event the dealership facility is being leased, to transfer, sell, lease or change the use of the dealership premises, whether by sublease, lease, collateral pledge of lease or other similar agreement; or

                        (iii) which gives control of the premises to a designated party. "Site control agreement" and "exclusive use agreement" also include manufacturer parties restricting the ability of a dealer to transfer, sell or lease the dealership premises by right of first refusal to purchase or lease, option to purchase, or option to lease, except as otherwise allowed by K.S.A. 8-2416, and amendments thereto, except that voluntary agreements where separate and adequate consideration has been offered and accepted are excluded;

            (8) through the use of written instrument, or otherwise, require adherence to a performance standard or standards which are not applied uniformly to other similarly situated dealers. In addition to any other requirements by law, the following shall apply:

                        (A) A performance standard, sales objective or program for measuring dealer performance that may have a material effect on a dealer, including the dealer’s right to payment under any incentive or reimbursement program and the application of the standard, sales objective or program by a manufacturer, distributor or factory branch shall be fair, reasonable, equitable and based on accurate information;

                        (B) a dealer that claims that the application of a performance standard, sales objective or program for measuring dealership performance does not meet the standards listed in subparagraph (A) may request a hearing before the director pursuant to K.S.A. 8-2411, and amendments thereto; and

                        (C) a first or second stage manufacturer of vehicles, factory branch or distributor has the burden of proving by a preponderance of the evidence that the performance standard, sales objective or program for measuring dealership information complies with this subsection;

            (9) in addition to any other provisions of law, a franchise agreement or other contract offered to a dealer by a first or second stage manufacturer of vehicles, factory branch or distributor may not contain any provision requiring a dealer to pay the attorney’s fees of the first or second stage manufacturer of vehicles, factory branch or distributor related to disputes between the parties.

            (c) The director may deny the application for the license within 30 days after receipt thereof by written notice to the applicant, stating the grounds for such denial. Upon request by the applicant whose license has been so denied, the applicant shall be granted an opportunity to be heard in accordance with the provisions of the Kansas administrative procedure act.

            (d) If a licensee is a firm or corporation, it shall be sufficient cause for the denial, suspension or revocation of a license that any officer, director or trustee of the firm or corporation, or any member in case of a partnership, has been guilty of any act or omission which would be good cause for refusing, suspending or revoking a license to such party as an individual. Each licensee shall be responsible for the acts of its salespersons or representatives while acting as its agent.

            (e) Any licensee or other person aggrieved by a final order of the director, may appeal to the district court as provided by the Kansas judicial review act.

            (f) The revocation or suspension of a first or second stage manufacturer’s or distributor’s license may be limited to one or more municipalities or counties or any other defined trade area.

History: L. 1980, ch. 36, § 10; L. 1981, ch. 48, § 8; L. 1984, ch. 313, § 47; L. 1986, ch. 50, § 2; L. 1988, ch. 52, § 4; L. 1989, ch. 47, § 1; L. 1991, ch. 33, § 25; L. 1992, ch. 44, § 3; L. 1993, ch. 252, § 7; L. 1994, ch. 302, § 6; L. 1998, ch. 71, § 1; L. 2010, ch. 155, § 26; L. 2011, ch. 30, § 98; July 1.

8-2411. Violations; hearing; penalties; appeals.

            (a) When any licensee is found to be allegedly violating any of the applicable provisions of this act, or any order or rule and regulation adopted pursuant thereto, the director upon the director's own motion or upon complaint may commence a hearing against the licensee, which hearing shall be conducted in accordance with the provisions of the Kansas administrative procedure act.

            (b) Any person who is found to have violated any applicable provisions of this act, any rule and regulation adopted pursuant thereto or any applicable order of the director shall be subject to a civil penalty of not less than $50 nor more than $1,000 for each violation or such person's license may be suspended or revoked or both civil penalty and license suspension or revocation, revocation, except that in addition to any civil penalty imposed pursuant to this subsection, the director shall suspend or revoke the license of any person who is found to have violated the provisions of K.S.A. 79-3601 et seq., and amendments thereto, by the failure to file returns and remit sales tax as required pursuant to K.S.A. 79-3607, and amendments thereto, or the provisions of K.S.A. 79-3294 et seq., and amendments thereto, by the failure to file returns and remit withholding tax as required pursuant to K.S.A. 79-3298, and amendments thereto, for three consecutive months.

            (c) Any party aggrieved by the decision of the director may appeal the same to the district court in accordance with the provisions of the Kansas judicial review act.

History: L. 1980, ch. 36, § 11; L. 1981, ch. 48, § 9; L. 1983, ch. 43, § 2; L. 1984, ch. 313, § 48; L. 1990, ch. 43, § 8; L. 2004, ch. 173, § 1; L. 2010, ch. 17, § 21; July 1.

8-2412. Dealer review board; membership; meetings; compensation and expenses; secretary; attachment to department of revenue.

            (a) The governor shall appoint eight members to serve on the dealer review board with the individual terms of office for each appointee to run as follows: One new vehicle dealer, one used vehicle dealer and one salvage vehicle dealer, each to serve for three consecutive years; one new vehicle dealer, one used vehicle dealer, and two additional members both of whom shall be appointed from the public at large, each to serve for two consecutive years; and one representative of a first or second stage manufacturer to serve for a period of one year. Upon the expiration of their respective terms, board members shall be appointed by the governor to serve for three consecutive years.

            (b) The board shall elect a chairperson from among its members. The chairperson shall serve for a period of one year. The board shall elect successors each subsequent year.

            (c) Any proceeding conducted by the board shall be construed to be a meeting of the board under this section for each day the proceeding is conducted. To constitute a meeting of the board within the meaning of this section, a quorum of the board must be present and participating. Four members of the board shall constitute a quorum. All final orders shall be in writing and shall be signed by the chairperson and approved by the board.

            (d) Members of the board attending meetings of such board shall be paid compensation, subsistence allowances, mileage and other expenses as provided in K.S.A. 75-3223, and amendments thereto. In no event shall any member be paid compensation or allowances for more than 15 days in any calendar year.

            (e) Meetings of the board may be called by the director, the chairperson of the board or any three members of the board, after first giving notice, in writing, at least 10 days prior to such meeting. The notice of any meeting of the board shall state the time and place of such meeting which special meeting may be held at any place within the state of Kansas. Additionally, such notice of the meeting shall state the purpose thereof.

            (f) The director of vehicles may either appoint or designate a secretary for the board. The secretary shall perform, among other things, the following duties: Prepare the agenda for the meetings of the board; prepare notice of all meetings and cause the same to be mailed to all board members; take minutes of all meetings of the board and thereafter cause copies thereof to be distributed to all board members; arrange for meeting places within the state of Kansas at the direction of the chairperson; prepare vouchers for each board member to submit for expense of attendance at meetings; and, such other duties as requested by the board.

            (g) The board shall be attached to the department of revenue and shall be within the department of revenue as a part thereof. All budgeting, purchasing and related management functions of the board shall be administered under the direction and supervision of the secretary of revenue. The division shall serve as the administrative and enforcement agency of the board in all respects and shall perform such services and duties as it may be legally called upon to perform. In the event the board fails to perform any of its official duties within the time prescribed herein, the division may perform such duties and certify its action to the board for review.

History: L. 1980, ch. 36, § 12; L. 1982, ch. 49, § 2; L. 1990, ch. 43, § 9; L. 1991, ch. 33, § 26; L. 1992, ch. 116, § 24; July 1.

8-2413. Injunctions; jurisdiction of courts.

            (a) Upon application of the board, the director or any person having any interest in the subject matter, the district courts of this state may enjoin any person from violating any of the provisions of this act or any order or rule and regulation issued or adopted pursuant thereto.

            (b) Notwithstanding any other statute, law or rule of court, any first or second stage manufacturer or distributor or new vehicle dealer which has entered a franchise agreement with the other under which a dispute has arisen with respect to the conduct of business or the business relationship between the parties shall participate in the mediation of the dispute upon the request of any party to the matter. In the event mediation is requested, any time frame applicable for taking action under the dealers and manufacturers licensing act shall be deemed stayed or tolled, as the case may be until the mediation is completed. The mediation shall be nonbinding, unless the parties reach agreement resolving the dispute.

History: L. 1980, ch. 36, § 13; L. 1984, ch. 313, § 49; L. 2010, ch. 71, § 3; April 15.

8-2414. Cancellation, termination or nonrenewal of franchise agreements between dealers and manufacturers or distributors; cause; hearing; burden of proof; compensation upon termination; effect of noncompliance by manufacturer or distributor.

            (a) No franchise agreement entered into between a vehicle dealer and a first or second stage manufacturer or distributor may be cancelled, terminated or not renewed by the first or second stage manufacturer or distributor unless 90 days notice has been given to the vehicle dealer and the director, which notice must state in full the reasons and causes for the cancellation, termination or nonrenewal of such franchise agreement, except that in the event of a showing of fraud, insolvency or failure to perform in the ordinary course of business, a notice of not less than 15 days may be approved by the director, with notice thereof to such vehicle dealer and upon written application by such first or second stage manufacturer or distributor. A notice required under this subsection shall be given by certified mail and the period of time given in the notice prior to cancellation, termination or nonrenewal shall be computed from the date of mailing thereof.

            (b) A vehicle dealer, within a period of time equal to that provided for in the notice filed pursuant to subsection (a), may file a complaint with the director against a first or second stage manufacturer or distributor challenging the reasons and causes given for the proposed cancellation, termination or nonrenewal of the franchise agreement. Upon a complaint being filed, the director shall promptly set the matter for public hearing, in accordance with K.S.A. 8-2411, and amendments thereto, for the purpose of determining whether there has been a violation of K.S.A. 8-2410, and amendments thereto, or whether good cause exists for cancellation, termination or nonrenewal of the franchise agreemen tin accordance with the dealers and manufacturers licensing act.. Notwithstanding the provisions of K.S.A. 8-2411, and amendments thereto, the hearing may be set for a time which is not less than the number of days provided in the notice given pursuant to subsection (a), from the date the director gives notice thereof.

            (c) The franchise agreement shall remain in full force and effect pending the determination by the director of the issues involved as provided by this act. If the director determines that the first or second stage manufacturer or distributor is acting in violation of this act or that good cause does not exist for the proposed action, the director shall order for the franchise agreement to be kept in full force and effect.

            (d) The burden of proof shall be on the first or second stage manufacturer or distributor to show by a preponderance of the evidence that it did not act arbitrarily or unreasonably and that good cause did exist for the proposed cancellation, termination or nonrenewal of the franchise agreement. The director shall order that the franchise agreement may be cancelled, terminated or not renewed if the director finds, after a hearing that the licensed vehicle dealer is acting in violation of this act or that the judgment of the first or second stage manufacturer or distributor is with good cause and the vehicle dealer's default is material.

            (e) (1) In the event of cancellation, termination or nonrenewal of a franchise agreement, good cause as used in this section shall mean the failure of the new vehicle dealer to effectively carry out the performance provisions of the franchise agreement if all of the following have occurred:

            (A) The new vehicle dealer was given notice by the first or second stage manufacturer or distributor of the failure prior to the notice of cancellation, termination or nonrenewal as required by subsection (a);

            (B) the notification stated that the notice of failure of performance was provided pursuant to this article;

            (C) the new vehicle dealer was afforded a reasonable opportunity to carry out the franchise agreement; and

            (D) the failure continued for more than one year after the date notification was given.

            (2) In the event of cancellation, termination or nonrenewal of a franchise agreement, good cause shall not exist where there has been a violation by the first or second stage manufacturer or distributor of K.S.A. 8-2410, and amendments thereto, or any other provision of the dealers and manufacturers licensing act.. Additionally, notwithstanding any agreement, the following alone shall not constitute good cause for the termination, cancellation or nonrenewal of a franchise agreement:

            (A) A change in ownership of the new vehicle dealer's dealership. This subparagraph does not authorize any change in ownership which would have the effect of a sale or an assignment of the franchise agreement or a change in the principal management of the dealership without the first or second stage manufacturer's or distributor's prior written consent;

            (B) the refusal of the new vehicle dealer to purchase or accept delivery of any new motor vehicles, parts, accessories or any other commodity or services not ordered by the new vehicle dealer;

            (C) the fact that the new vehicle dealer owns, has an investment in, participates in the management of or holds a franchise agreement for the sale or service of another make or line of new motor vehicles, or that the new vehicle dealer has established another make or line of new motor vehicles or service in the same dealership facilities as those of the first or second stage manufacturer or distributor;

            (D) the fact that the new vehicle dealer sells or transfers ownership of the dealership or sells or transfers capital stock in the dealership to the new vehicle dealer's spouse, son or daughter, except that the sale or transfer shall not have the effect of a sale or an assignment of the franchise agreement without the first or second stage manufacturer's or distributor's prior written consent or approved as allowed by K.S.A. 8-2416, and amendments thereto.

            (f) (1) In event of cancellation, termination or nonrenewal of a franchise agreement, whether voluntary or involuntary, the first or second stage manufacturer or distributor shall pay the new vehicle dealer, at a minimum:

            (A) Dealer net acquisition cost for any new, undamaged and unsold new motor vehicle inventory purchased from the first or second stage manufacturer or distributor within 12 months prior to the receipt of notice of termination, cancellation or nonrenewal, provided the new motor vehicle has less than 500 miles registered on the odometer, not including mileage incurred in delivery to the new vehicle dealer or in transporting the vehicle between dealers for sale or delivery, plus any cost to the new vehicle dealer for returning the vehicle inventory to the first or second stage manufacturer or distributor;

            (B) the dealer price listed in the current list or catalog or, if unavailable, the list or catalog actually utilized within the 12 months previous to termination, cancellation or nonrenewal, as the case may be, for any new, unused and undamaged parts, supplies, and accessories acquired from a first or second stage manufacturer, or distributor, or a source approved or recommended by it, less applicable allowances specified in advance of dealer purchase, plus 5% of the catalog or list price, as the case may be, for the cost of packing and returning the parts, supplies and accessories to the first or second stage manufacturer or distributor. Parts, supplies or accessories which are reconditioned or subject to reconditioning or rebuilding or other return in the ordinary course of business which are considered to be core parts in the trade practice and usage of the industry shall be valued for payment purposes at their core value, the price listed in the catalog or list referenced above or the amount paid for expedited return of core parts, whichever is higher;

            (C) fair market value for furnishings required to be purchased by the first or second stage manufacturer or distributor and signs which bear the trademark or trade name of the first or second stage manufacturer or distributor which were required or recommended to be purchased or leased from the first or second stage manufacturer or distributor, or their approved sources;

            (D) dealer cost for special tools and equipment required to be purchased or leased by the first or second stage manufacturer or distributor within three years of the date of termination, cancellation or nonrenewal;

            (E) dealer cost for computers and data processing systems which are in usable condition and were leased or purchased within three years of the date of termination, cancellation or nonrenewal of the franchise agreement up to an amount equal to the cost of meeting the minimum standards and requirements for the dealer to participate in promotional or incentive programs or perform the franchise agreement;

            (F) the cost of transporting, handling, packing and loading of signs, special tools, equipment and furnishings.

            (2) Upon termination, cancellation or nonrenewal of a franchise agreement by the first or second stage manufacturer or distributor, the first or second stage manufacturer or distributor shall also pay to the new vehicle dealer a sum equal to the current fair rental value of its established place of business for a period of one year from the effective date of termination, cancellation or nonrenewal, or the remainder of the lease, whichever is less. If the new vehicle dealer owns the dealership facilities, the first or second stage manufacturer or distributor shall pay the new vehicle dealer a sum equivalent to the reasonable rental value of the dealership facilities for one year or until the facilities are leased or sold, whichever is less. The rental payment required under this subsection is only required to the extent that the established place of business was being used for activities under the franchise agreement and only to the extent such facilities were not leased for unrelated purposes. The first or second stage manufacturer or distributor shall not be required to make the payment set forth under this subsection if the basis of the cancellation, termination or nonrenewal of such franchise agreement under this act is due to conviction of the dealer of a felony or any crime involving moral turpitude, or if the dealer has been adjudged guilty of the violation of any law of any state or the United States in connection with such person's operation as a dealer.

            (3) To the extent the franchise agreement provides for payment or reimbursement to the new vehicle dealer in excess of that specified in this section, the provisions of the franchise agreement shall control.

            (4) The first or second stage manufacturer or distributor shall pay the new vehicle dealer the sums specified in this subsection within 90 days after the tender of the property, subject to the new vehicle dealer providing evidence of good and clear title upon return of the property to the first or second stage manufacturer or distributor.

            (5) Nothing in this subsection shall preclude or prohibit the first or second stage manufacturer or distributor or vehicle dealer from agreeing to other terms for additional payment or reimbursement, except that such terms shall include, at a minimum, the payment or reimbursement requirements contained in this subsection;

            (6) The provisions of this subsection shall not apply to voluntary termination by dealers of recreational vehicles or to where the new vehicle dealer has voluntarily terminated its franchise agreement in conjunction with the sale of the business.

            (g) Failure of the first or second stage manufacturer or distributor to give proper notice or maintain the franchise agreement in full force and effect pending determination by the director pursuant to this act, or to abide by the final order of the director, shall be cause for the director to refuse to issue a license to a replacement vehicle dealer or to a dealership which would be conducting business in the same trade area and selling the same make of vehicles where the vehicle dealer in question was engaged in business.

History: L. 1980, ch. 36, § 14; L. 1981, ch. 48, § 10; L. 1983, ch. 43, § 3; L. 1996, ch. 128, § 1; L. 2010, ch. 71, § 4; Apr. 15.

8-2415. Correction of warranty defects; compensation to dealer; promotional allowances or incentive payments.

            (a) A first or second stage manufacturer or distributor shall pay reasonable compensation to any authorized new vehicle dealer who performs work to rectify warranty defects in the first or second stage manufacturer's or distributor's product.

            (b) A first or second stage manufacturer or distributor shall pay any authorized new vehicle dealer all promotional allowances or other incentive payments submitted by the dealer as provided by the applicable provisions of such programs subject to the applicable requirements of this act.

            (c) In the determination of what constitutes reasonable compensation for warranty work under this act, among the factors to be considered shall be: The rate or charge which the authorized vehicle dealer in good faith is charging other customers for the same type of service or repair work, the compensation being paid by other first or second stage manufacturers or distributors to their vehicle dealers for the same work or service, and the prevailing wage or labor rate being paid or charged by all vehicle dealers licensed to operate in the city or community in which said authorized vehicle dealer is doing business.

            (d) A first or second stage manufacturer or distributor shall not require unreasonable proof to establish compensation under this section, nor act unreasonably to delay payments or adjustments in the rate or charge for particular warranty work, promotional allowances or other incentive payments as circumstances or changes may justify or require such adjustments. A claim for compensation shall not be divided or the amount to be reimbursed reduced if the new vehicle dealer has reasonably substantiated the claim. A new vehicle dealer’s failure to comply with the specific requirements of processing a claim may not constitute grounds for denial of the claim or reduction of the amount of compensation paid to the dealer if the dealer presents reasonable documentation or other evidence to substantiate the claim. If the claim is for warranty work, whether or not it includes parts, repairs or services, then the amount of compensation for the claims shall not be reduced or disallowed on the grounds the dealer failed to submit the claim fewer than 60 days after the dealer completed the work underlying the claim.

            (e) A claim made by a new motor vehicle dealer for compensation under this section shall be either approved or disapproved within 30 days after the claim is submitted to the first or second stage manufacturer or distributor in the manner and on the forms the first or second stage manufacturer or distributor reasonably prescribes. An approved claim shall be paid within 30 days after its approval. If a claim is not specifically disapproved in writing or by electronic transmission within 30 days after the date on which the first or second stage manufacturer or distributor receives it, the claim shall be considered to be approved and payment shall follow within 30 days. A first or second stage manufacturer or distributor retains the right to audit claims for warranty work for a period of one year after the date on which the claim is paid and to chargeback any amounts paid on claims that are false or unsubstantiated. A first or second stage manufacturer or distributor retains the right to audit claims for promotional allowances or other incentive payments submitted by the dealer for a period of two years after the date on which the claim is paid and to chargeback any amounts paid on claims that are false or unsubstantiated. If there is evidence of fraud, this subsection does not limit the right of the manufacturer to audit for longer periods and chargeback for any fraudulent claim, subject to the limitation period under paragraph (3) of subsection (a) of K.S.A. 60-513, and amendments thereto, in addition to any other available remedy. A claim for reimbursement by the first or second stage manufacturer or distributor of sums due following an audit must be presented to the dealer within 90 days of the audit of the item subject to the claim. A first or second stage manufacturer or distributor may not setoff or otherwise take control over funds owned, or under the control of the new vehicle dealer, or which are in an account designated for the new vehicle dealer when such action is based upon the findings of an audit or other claim with respect thereto until a final decision is issued with respect to any challenge or appeal by either party of any such audit or claim. This.section may be enforced pursuant to K.S.A. 8-2411, and amendments thereto.

History: L. 1980, ch. 36, § 15; L. 1994, ch. 302, § 7; L. 2010, ch. 71, § 5; April 15.

8-2416. Sale, transfer or assignment of dealership, notice and limitations; disapproval procedure; duties of manufacturer or distributor; appointment of successor.

            (a) A vehicle dealer shall not transfer, assign or sell a franchise agreement or interest in a dealership to another person unless the dealer first gives written notice to the first or second stage manufacturer or distributor of the dealer's decision to make such transfer, assignment or sale. The dealer shall provide the first or second stage manufacturer or distributor with any completed application forms and related information generally utilized by the first or second stage manufacturer or distributor to conduct its review of prospective new vehicle dealers, and a copy of all agreements regarding the proposed transfer, assignment or sale.

            (b) The first or second stage manufacturer or distributor shall send a letter by certified mail to the dealer within 60 days of receipt of the information specified in subsection (a). The letter shall indicate any disapproval of the transfer, assignment or sale and shall specifically set forth the reasons for the disapproval. If the first or second stage manufacturer or distributor does not respond by letter within the 60-day period, its consent to the proposed transfer, assignment or sale is deemed to have been granted. A first or second stage manufacturer or distributor shall not arbitrarily or unreasonably withhold approval of the transfer, assignment or sale of a franchise agreement or an interest in a dealership. The first or second stage manufacturer or distributor may not approve or reject only a part of an agreement for the transfer, assignment or sale, but must accept or reject the whole agreement. If the first or second stage manufacturer or distributor rejects an agreement, it may indicate changes to the agreement which would cause it to accept the proposed agreement. An agreement may not be rejected merely because it provides provisions which operate in the future, an option to undertake or refrain from an action, or because it is to operate over an extended period of time or as an installment agreement.

            (c) Within 90 days after receipt of a notice of disapproval as provided in subsection (b), the new vehicle dealer may file a complaint with the director with respect to the first or second stage manufacturer or distributor's failure to approve the proposed transfer, assignment or sale. When such a complaint has been filed, the director shall inform the first or second stage manufacturer or distributor that a timely complaint has been filed and a hearing is required in accordance with the provisions of K.S.A. 8-2411 and amendments thereto, to determine whether good cause exists to disapprove the transfer, assignment or sale. A disapproval shall not be final until the director or the director's designee makes a final determination as to good cause.

            (d) A first or second stage manufacturer or distributor shall not fail or refuse to approve the transfer, assignment or sale of the business and assets of a new vehicle dealer, or refuse to continue the franchise agreement with the prospective transferee after the holding of a hearing on the complaint if the director or the director's designee determines that good cause does not exist for the first or second stage manufacturer or distributor to fail or refuse to approve such transfer, assignment or sale. The burden of proof shall be on the first or second stage manufacturer or distributor to show by a preponderance of the evidence, that the disapproval of the transfer, assignment or sale was with good cause and the refusal is not unjust, unfair, inequitable or otherwise in violation of the dealers and manufacturers licensing act.. Material factors to be considered may include, but are not limited to: (1) Whether the basic financial and facility requirements of the franchise agreement will be met by the proposed transfer, assignment or sale;

            (2) whether the proposed purchaser, transferee or assignee is capable of operating, managing and supervising such business; and

            (3) the extent to which the refusal to approve will have a substantial and adverse effect upon the dealer's investment or return on investment.

            (e) The first or second stage manufacturer or distributor shall have a right of first refusal to acquire the new vehicle dealer's assets or ownership in the event of a proposed change of all or substantially all of the dealer's ownership, or the transfer of all or substantially all of the new vehicle dealer's assets, if all of the following are met: (1) The first or second stage manufacturer or distributor notifies the dealer in writing within the 60-day limit established under subsection (b) of its intent to exercise its right of first refusal;

            (2) the exercise of the right of first refusal will result in the dealer and dealer's owners receiving consideration, terms and conditions that either are the same as or greater than that which they have contracted to receive in connection with the proposed change of all or substantially all of the dealer's ownership, or the transfer of all or substantially all of the new vehicle dealer's assets;

            (3) the proposed change of all or substantially all of the dealership's ownership or the transfer of all or substantially all of the new vehicle dealer's assets does not involve the transfer of assets or the transfer or issuance of stock by the dealer or one or more dealer owners to a designated family member or members, including the spouse, child or grandchild, spouse of a child or grandchild, brother, sister or parent of the dealer owner, or one or more dealer owners, or to a qualified manager, or to a partnership or corporation controlled by any such person; or to a trust arrangement established or to be established for the purpose of allowing the new vehicle dealer to continue to qualify as such a dealer, so long as the new vehicle dealer continues to qualify as such pursuant to the first or second stage manufacturer or distributor's standards, or provides for the succession of the franchise agreement to designated family members or qualified management in the event of the death or incapacity of the dealer or its principal owner or owners; and

            (4) except as otherwise provided in this subsection, the first or second stage manufacturer or distributor agrees to pay the reasonable expenses, including reasonable attorney fees, which do not exceed the usual, customary and reasonable fees charged for similar work done for other clients, incurred by the proposed owner or transferee prior to the first or second stage manufacturer or distributor's exercise of its right of first refusal in negotiating and implementing the contract for the proposed change of all or substantially all of the dealer ownership, or the transfer of all or substantially all of the new vehicle dealer's assets. No payment of expenses and attorney fees shall be required if the dealer has not submitted or caused to be submitted an accounting of those expenses within 20 days of the dealer's receipt of the first or second stage manufacturer or distributor's written request for such an accounting. Such an expense accounting may be requested by a first or second stage manufacturer or distributor before exercising its right of first refusal.

            (f) A new vehicle dealer and its owners may appoint by trust, will or any other valid written instrument a successor to the owner's interest in the franchise agreement upon the owner's death or incapacity, subject to the following procedures: (1) Unless the first or second stage manufacturer or distributor has good cause to refuse to approve the succession, the successor may succeed to the ownership of the new vehicle dealer under the existing franchise agreement if: (A) Within 90 days of the owner's death or incapacity, the successor gives written notice of the successor's intent to succeed to ownership of the new vehicle dealer and its franchise agreement; and

            (B) the successor agrees to be bound by all the terms and conditions of the franchise agreement with the prior new vehicle dealer.

            (2) Upon request, the successor shall promptly provide the first or second stage manufacturer or distributor evidence of the successorship appointment, as well as personal and financial information reasonably necessary to determine whether the succession should be approved by the first or second stage manufacturer or distributor.

            (3) If a first or second stage manufacturer or distributor believes that good cause exists to refuse to approve the intended succession under subsection (f)(1), then the first or second stage manufacturer or distributor shall serve the new vehicle dealer and named successor written notice of refusal to approve the intended succession within 60 days of its receipt of the notice of the intended succession, or within 60 days of receiving the information requested under paragraph (f)(2), whichever is later. The notice must contain specific grounds for the refusal to approve the succession. In the event of such a refusal the new vehicle dealer or successor may file a complaint as provided under subsection (c), and the matter shall then proceed to hearing in the manner and on the same basis as the disapproval of a transfer, assignment or sale.

            (4) If notice of refusal to approve the intended succession is not served within 60 days upon the intended successor, the successor may continue the franchise agreement and the successor shall thereby be deemed approved by the first or second stage manufacturer or distributor.

            (g) It shall be a violation of this act for a first or second stage manufacturer or distributor, or anyone on their behalf, to exercise a right of first refusal or other right to acquire the business of the new vehicle dealer or a franchise agreement as a means to influence the consideration or other terms offered by a person in connection with the acquisition of the business or franchise agreement or to influence a person to refrain from entering into, or to withdraw from, negotiations for the acquisition of the business or franchise agreement.

History: L. 1980, ch. 36, § 16; L. 1983, ch. 43, § 4; L. 1998, ch. 71, § 2; L. 2010, ch. 71, §6; April 15.

8-2417. Jurisdiction over licensees; service of process in secretary of state.

            (a) The obtaining of a license hereunder shall bring the applicant under the jurisdiction of the state of Kansas, and if no agent for service of process has been designated by a licensee, the said licensee will be deemed to have designated the secretary of the state of Kansas as agent for receipt of service of process.

            (b) No franchise agreement or other agreement between the parties to a franchise agreement may limit, waive or substitute the party’s rights, duties or obligations under this act absent separate and additional, adequate consideration, nor compel a party to consent to jurisdiction or governance by the law of of another state or territory outside Kansas, or to forego any right to trial by jury.

History: L. 1980, ch. 36, § 17; L. 2010, ch. 71, 7; April 15.

8-2418. Disposition of moneys.

            (a) The director shall remit all moneys received by or for the director from fees, charges or penalties under the provisions of this act to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state highway fund, except as provided in subsection (b).

            (b) On and after July 1, 2002, $25 of each license fee collected under subsections (e) and (f) of K.S.A. 8-2404, and amendments thereto, except that $10 of each license fee collected under paragraph (14) of subsection (e) and subsection (h) of K.S.A. 8-2404, and amendments thereto, shall be remitted to the state treasurer who shall credit such amounts to the vehicle dealers and manufacturers fee fund.

History: L. 1980, ch. 36, § 18; L. 2001, ch. 5, § 39; L. 2002, Ch. 102, §2 (SB458); July 1.

8-2419. Liability of manufacturers for defects in equipment.

            All first or second stage manufacturers and distributors shall be liable for the full period of the warranty of the vehicle for all defects in any equipment attached to any vehicle at the factory and all defects in any equipment produced by or advertised as an accessory to a vehicle manufactured by such first or second stage manufacturer which is added at the dealership whether such equipment is added to a new or to a used vehicle so long as such equipment has been advertised as being either an 'accessory' or an 'option.'

(b) All first stage manufacturers and second stage manufacturers and distributors shall, upon demand:

            (1) Indemnify any existing or former licensee or party to a franchise agreement and the licensee or party’s successors and assigns from any and all damages sustained and attorney’s fees and other expenses reasonably incurred by the licensee or party that result from or relate to any claim made or asserted by a third party against the licensee or party to the extent the claim results from any of the following:

                        (A) The condition, characteristics, manufacture, assembly or design of any vehicle, parts, accessories, tools or equipment or the selection or combination of parts or components manufactured or distributed by the manufacturer or distributor;

                        (B) service systems, procedures or methods the franchisor required or recommended the licensee or party to use if the licensee or party properly uses the system, procedure or method;

                        (C) improper use or disclosure by a manufacturer or distributor of nonpublic personal information obtained from a licensee or party concerning any consumer, customer or employee of the licensee or party; and

                        (D) any act or omission of the manufacturer or distributor for which the licensee or party would have a claim for contribution or indemnity under applicable law or under the franchise, irrespective of and without regard to a prior termination or expiration of the franchise.             (2) This subsection does not limit in any way the existing rights, remedies or recourses available to any licensee, party or other person.

History: L. 1980, ch. 36, § 19; L. 2010, ch. 71, §8; April 15.

8-2420. Act supplemental to vehicle registration laws.

            This act is supplementary to the vehicle registration laws of Kansas, and nothing herein shall be construed as abridging or amending such laws.

History: L. 1980, ch. 36, § 20; July 1.

8-2421. Severability.

            If any word, phrase, sentence or provision of this act is determined to be invalid, such invalidity shall not affect the other provisions of this act, and they shall be given effect without the invalid provision, and to this end the provisions of this act are declared to be severable.

History: L. 1980, ch. 36, § 21; July 1.

8-2422. Citation of act.

            This act may be cited as the vehicle dealers and manufacturers licensing act.

History: L. 1980, ch. 36, § 22; L. 1983, ch. 43, § 5; July 1.

8-2423. Rules and regulations.

            The secretary of revenue may adopt such rules and regulations as are necessary for the administration of this act. Prior to hearing or adoption of rules and regulations under this section the secretary shall submit copies thereof to the dealers review board for its review and comment.

History: L. 1980, ch. 36, § 23; July 1.

8-2425. Full-privilege license plates; fees; use.

            (a) When a first dealer license plate has been issued under K.S.A. 8-2406 and amendments thereto, the secretary of revenue may issue full-privilege license plates or dealer-hauler full-privilege trailer license plates, in accordance with the provisions of this section, to a licensed manufacturer of or licensed dealer in vehicles. In no calendar year shall the secretary issue in excess of 10 of each type of such license plates to any licensed manufacturer or dealer.

            (b) The annual fee for each full-privilege license plate shall be $350, and (2) dealer-hauler full-privilege trailer license plate shall be $350.50.

            (c) The secretary shall, upon application provided by the secretary and payment of the fee required in subsection (b), issue to the applicant the appropriate full-privilege license plate, which shall expire on the January 31 next following its issuance, except that the dealer shall have until and including the last day of February of each year within which to make application for renewal.

            (d) Subject to subsection (e), a full-privilege license plate may be used in lieu of regular vehicle registration and license plate. A full-privilege license plate may be used on passenger cars or trucks. A full-privilege license plate may be transferred from one vehicle to another owned or in inventory of such manufacturer or dealer and may be assigned for use by any person, at the discretion of the manufacturer or dealer to whom it is issued. The person to whom a full-privilege license plate is assigned for use shall be only a person who is: (1) A member of the immediate family of the licensed manufacturer of or licensed dealer in vehicles; (2) a corporate officer of the licensed manufacturer of or licensed dealer in vehicles; or (3) an employee of the licensed manufacturer of or licensed dealer in vehicles.

            (e) A full-privilege license plate shall not be used on a lease or rental vehicle. A full-privilege license plate shall not permit any vehicle to be operated or moved upon a highway to haul commodities weighing in excess of two tons. A full-privilege license plate shall not be used on a wrecker or tow truck when providing wrecker or towing service as defined by K.S.A. 66-1329 and amendments thereto.

            (f) A dealer-hauler full-privilege trailer license plate may be used by a trailer manufacturer or trailer dealer in lieu of a regular trailer registration and license plate. A dealer-hauler full-privilege trailer license plate may be used only on trailers. A dealer-hauler full-privilege trailer license plate may be transferred from one trailer to another owned or in inventory of the trailer manufacturer or trailer dealer to whom issued. A dealerhauler full-privilege trailer license plate may be used by a trailer manufacturer or trailer dealer to haul nonhighway equipment, as defined in rules and regulations, for either demonstration purposes or delivery, if the weight of the trailer and nonhighway equipment does not exceed 85,500 pounds. The dealer-hauler full-privilege trailer license plate shall expire on the January 31 next following its issuance, except that the dealer shall have until and including the last day of February of each year within which to make application for renewal.

            (g) Fees received under this section shall be divided equally between the county treasurer in which the licensed manufacturer or dealer has its established place of business and the secretary of revenue. Amounts alloted to the secretary of revenue shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the vehicle dealers and manufacturers fee fund which fund is hereby created in the state treasury. Expenditures from the vehicle dealers and manufacturers fee fund shall be made on vouchers approved by the secretary of revenue, or a person designated by the secretary, for enforcement of the vehicle dealers and manufacturers licensing act in accordance with appropriations therefor. Amounts alloted to the county treasurers shall be credited to the county treasurers' vehicle licensing fee fund which fund is hereby created in the state treasury. Amounts due each county treasurer shall be paid quarterly from such fund upon vouchers approved by the secretary of revenue or a person designated by the secretary. Amounts received by each county treasurer shall be deposited, appropriated and used as provided by K.S.A. 8-145 and amendments thereto.

            (h) The provisions of K.S.A. 8-136 and 8-2406 and amendments thereto shall not apply to full-privilege license plates or dealer-hauler full-privilege trailer license plates or the use thereof.

History: L. 1985, ch. 54, § 4; L. 2001, ch. 5, § 40; L. 2009, ch. 36, § 2, July 1.

8-2426. Same; unlawful acts; penalties.

            Violation of K.S.A. 8-2406 and amendments thereto or K.S.A. 8-2425 and amendments thereto is unlawful, and any person violating any provision thereof shall be subject to civil penalty of not less than $350 and not to exceed $1,000, as determined by the director of vehicles or a person appointed by the director after notice and hearing in accordance with the provisions of the Kansas administrative procedure act. The provisions of this section shall not affect the authority of the secretary of revenue or any officer of the department of revenue in enforcing any provision of the vehicle dealers and manufacturers licensing act, of which K.S.A. 8-2425 and amendments thereto and this section shall be a part.

History: L. 1985, ch. 54, § 5; L. 1988, ch. 356, § 36; July 1, 1989.

8-2428. Dealer review board; duties.

            (a) The dealer review board created by K.S.A. 8-2412 and amendments thereto shall:

            (1) Confer with the director on matters related to regulations relating to improved vehicle dealer practices;

            (2) serve to make suggestions and recommendations for changes in current law relating to vehicle sales and trade;

            (3) act as a resource for vehicle industry problems; and

            (4) provide expertise to uncover operating problems created by current law, while balancing problems against the greater public interest.

            (b) The provisions of this section shall not require any action prior to adoption of any rules and regulations by the secretary of revenue.

History: L. 1990, ch. 43, § 7; July 1.

8-2429. Interstate dealer licensing compact.

            The director of vehicles is hereby authorized to enter into an interstate dealer licensing compact with party states to facilitate the conveyance or exchange of information concerning violations or convictions of civil or criminal offenses committed by nonresident dealers in a party state.

History: L. 1990, ch. 32, § 1; July 1.

8-2430. Establishment of additional or relocation of existing new vehicle dealer; procedure; relevant market area.

            (a) Any licensee, or proposed licensee, who proposes to establish an additional new vehicle dealer for new motor vehicles, including a supplemental place of business for new motor vehicles, or permit the relocation of an existing new vehicle dealer in new motor vehicles to a location within the relevant market area where the same line-make vehicle is already presently represented by a new vehicle dealer or dealers in new motor vehicles of that same line-make shall give written notice of its intention by certified mail to the director of vehicles and shall establish good cause for adding or relocating the new vehicle dealer. The notice required hereunder shall state:

            (1) The specific location at which the additional or relocated new vehicle dealer in new motor vehicles will be established;

            (2) the date on or after which the licensee, or proposed licensee, intends to be engaged in business as a new vehicle dealer in new motor vehicles at the proposed location;

            (3) the identity of all new vehicle dealers in new motor vehicles who are franchised to sell the same line-make vehicle from licensed locations whose relevant market areas include the location where the additional or relocated dealer is proposed to be located;

            (4) the names and addresses of the new vehicle dealer-operator and principal investors in the proposed new vehicle dealer's business; and

            (5) a short and plain statement of the evidence the licensee, or proposed licensee, intends to rely upon in meeting the burden of proof for establishing good cause for an additional new vehicle dealer for new motor vehicles or permit relocation of an existing new vehicle dealer in new motor vehicles within a relevant market area where the same line-make of vehicle is presently represented by a new vehicle dealer.

            Immediately upon receipt of such notice the director shall cause a notice to be published in the Kansas register. The published notice shall state that a petition or complaint by any dealer with standing to protest pursuant to subsection (c) must be filed with the director not more than 30 days from the date of publication of the notice in the Kansas register. The published notice shall describe and identify the proposed new vehicle dealer and dealership sought to be licensed, and the director shall cause a copy of the notice to be mailed to those dealers identified in the notice under paragraph (3) of this subsection.

            (b) (1) An application for a new vehicle dealer license to act as a vehicle dealer in new motor vehicles in any city or county shall not be granted when the licensee, or proposed licensee, seeking to establish an additional new vehicle dealer, including a supplemental place of business for new motor vehicles, or relocate an existing new vehicle dealer in the same line-make of vehicles fails to comply with the requirements of this act, or when:

            (A) A timely protest is filed by a presently existing new vehicle dealer in new motor vehicles with standing to protest as defined in subsection (c); and

            (B) the director has held a hearing and determined that good cause has not been established for permitting the addition or relocation of such new vehicle dealer. The burden of proof in establishing good cause to permit an additional new vehicle dealer in new motor vehicles or to permit the relocation of an existing new vehicle dealer in new motor vehicles shall be on the licensee, or proposed licensee, seeking to establish or relocate a new vehicle dealer and shall be by a preponderance of the evidence presented;

            (2) in determining whether good cause has been established for an additional new vehicle dealer or the relocation of an existing new vehicle dealer for the same line-make of vehicle as provided herein, the director shall take into consideration the existing circumstances, including, but not limited to:

            (A) Permanency of the investment of both the existing and proposed new vehicle dealers;

            (B) growth or decline in population and new car registrations in the relevant market area;

            (C) effect on the consuming public in the relevant market area;

            (D) whether it is injurious or beneficial to the public welfare for an additional new vehicle dealer to be established;

            (E) whether the new vehicle dealers of the same line-make vehicles in that relevant market area are providing adequate competition and convenient customer care for the vehicles of the line-make in the market area which shall include the adequacy of vehicle sales and service facilities, equipment, supply of vehicle parts and qualified service personnel;

            (F) whether the establishment of an additional new vehicle dealer would increase competition and whether such increased competition would be in the public interest;

            (G) the effect and denial of relocation will have on a relocating dealer; and

            (H) the effect the new vehicle dealer addition or relocation which is proposed will have on the existing dealer or dealers.

            The application for a new vehicle dealer license shall not be denied after the applicant meets the requirements of this section if the applicant otherwise meets the requirements of the vehicle dealers and manufacturers licensing act K.S.A. 8-2401, et seq., and amendments thereto.

            (c) An existing new vehicle dealer in new motor vehicles shall have standing to protest the proposed addition or relocation of a new vehicle dealer in new motor vehicles where such existing new vehicle dealer in new motor vehicles has a franchise agreement for the same line-make vehicle as that which is to be sold or offered for sale or transfer by the proposed additional or relocated new vehicle dealer and is physically located such that the protesting dealer's relevant market area, as defined in subsection (e), includes the location where the additional or relocated dealer is proposed to be located.

            (d) The director shall not issue a license for the proposed additional or relocated new vehicle dealer until a final decision is rendered determining good cause exists for establishing an additional new vehicle dealer or relocating a new vehicle dealer and that the application for the new vehicle dealer's license should be granted.

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

            (1) '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; and

            (2) 'relevant market area' means the area within:

            (A) A radius of 10 miles around an existing new vehicle dealer in new motor vehicles, if the existing new vehicle dealer's principal location is in a county having a population of 30,000 or more persons;

            (B) a radius of 15 miles around an existing new vehicle dealer in new motor vehicles, if the existing new vehicle dealer's principal location is in a county having a population of less than 30,000 persons; or

            (C) the area of responsibility defined in the franchise agreement of the existing dealer, whichever is greater.

            (f) No person, entity, licensee or their agents or employees, shall require the relocation, cancellation or termination of an existing dealer or otherwise take any action to penalize any dealer who exercises the rights provided under this section, or undertake such action for the purpose of preventing or avoiding the exercise by a dealer of the rights provided under this section. No franchise agreement made, entered or renewed after the effective date of this act shall contain provisions which avoid or circumvent the requirements of this act.

            (g) A dealer's license may be denied, suspended or revoked, or the renewal of a dealer's license may be refused by the director for the dealer's failure to comply with this section or for otherwise violating its provisions.

            (h) Any licensee, or proposed licensee, aggrieved by a final order of the director may appeal as provided in subsection (d) of K.S.A. 8-2410, and amendments thereto.

History: L. 1991, ch. 32, § 1; L. 1993, ch. 252, § 8; L. 1994, ch. 302, § 8; July 1.

8-2431. Same; exemption for manufacturers with dispute resolution procedures.

            The provisions of K.S.A. 8-2430, and amendments thereto, shall not apply to any proposed establishment of an additional new motor vehicle dealer, including a supplemental place of business, or relocation of an existing new motor vehicle dealer, as the case may be, if a manufacturer, distributor or factory branch provides a dispute resolution mechanism for the establishment of an additional new motor vehicle dealer or supplemental place of business or for relocating a new motor vehicle dealer which meets the following criteria:

            (a) The decision makers under the dispute resolution mechanism shall either be:

            (1) Independent and not employed by, or affiliated with the manufacturer, distributor, factory branch or dealers if there is no specific process reached by prior agreement between the protesting dealer and the manufacturer, distributor or factory branch; or

            (2) an individual or panel selected by a process mutually agreeable to the protesting dealer and the manufacturer, distributor or factory branch under the terms of the franchise agreement between them.

            (b) There is a standard for deciding such cases under the terms of the dispute resolution process which allows a protesting dealer to include evidence on impact upon the existing dealers in addition to any other factors expressly or implicitly considered under the mechanism.

History: L. 1991, ch. 32, § 2; L. 1994, ch. 302, § 9; July 1.

8-2432. Same; act part of vehicle dealers and manufacturers licensing act.

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

History: L. 1991, ch. 32, § 3; May 2.

8-2433. Temporary permit for vehicle salesperson.

            (a) Whenever application for a license as a vehicle salesperson has been made, a temporary permit may be granted by the director, effective with the application date for the salesperson license provided the salesperson is under direct supervision whenever any sale for a vehicle is conducted. The temporary permit shall be valid until such time as the application is approved or denied by the director but in no case shall such temporary license be valid for a period exceeding 45 days.

            (b) The director shall not grant to any person more than one temporary salesperson's license, as provided in subsection (a), during any twelve-month period commencing with the date on which the person made application for licensing as a salesperson and such temporary permit was granted.

            (c) This section shall be a part of and supplemental to the vehicle dealers and manufacturers licensing act.

History: L. 1992, ch. 37, § 1; L. 1993, ch. 252, § 9; July 1.

8-2434. Selling motor vehicles without a license; penalty.

            It shall be unlawful and constitute a misdemeanor, punishable by a fine not to exceed $2,500, for any person to do business as a motor vehicle dealer, salvage vehicle dealer, motor vehicle manufacturer, motor vehicle converter, auction motor vehicle dealer , vehicle crusher, vehicle recycler, rebuilder, scrap metal recycler, salvage vehicle pool or salesperson without a license issued by the director. The isolated or occasional sale of a vehicle by a person who owned such vehicle shall not constitute the doing of business as a vehicle dealer.

History: L. 1992, ch. 130, § 1; L. 2009, ch. 63, § 6, July 1.

8-2435. Display of motor vehicles at a location other than dealer's place of business; permit.

            (a) Upon proper application, on a form approved by the division of vehicles, the director of vehicles may authorize the display of new motor vehicles at a location other than the established or supplemental place of business of a motor vehicle dealer provided that the requirements of subsections (i) and (n) of K.S.A. 8-2404, and amendments thereto, and K.S.A. 8-2405, and amendments thereto, are satisfied by the motor vehicle dealer. A fee in the amount of $15 shall be paid by an applicant for each application. No sales transactions may occur at such display locations.

            (b) Authorization granted by the director under this section shall be granted only to motor vehicle dealers licensed by the director and to no other person, natural or otherwise. The authorization shall be for a period not to exceed 15 consecutive days unless otherwise authorized by the director of vehicles.

            (c) Authorization to display under this section shall not be granted for events for which a temporary trade show license under section 4, and amendments thereto, would be required.

            (d) The director may deny an application for a license under this section if the director:

            (1) Has probable cause to believe that the applicant’s request for a license should be made under the provisions of section 4, and amendments thereto; or

            (2) the request for a license under this section is being made to avoid compliance with the provisions of section 4, and amendments thereto.

            (e) The provisions of this section shall be a part of and supplemental to the vehicle dealers and manufacturers licensing act.

History: L. 1992, ch. 44, § 1; L. 2002, Ch. 102, § 3 (SB 458); July 1.

8-2436. Salvage vehicle pools; registration; requirements.

            (a) A salvage vehicle pool shall be licensed in accordance with the provisions of this act.

            (b) A salvage vehicle pool shall have available on the premises a certificate of title or a facsimile or photocopy of the complete title of a salvage vehicle sold by the salvage vehicle pool.

            (c) The provisions of this section shall be part of and supplemental to the vehicle dealers and manufacturers licensing act.

History: L. 1994, ch. 302, § 10; L. 2009, ch. 63, § 7, July 1.

8-2437. Application of act.

            (a) Any licensee receiving or renewing its license after the effective date of this act in all respects agrees to be bound by its provisions and shall comply with it, and no franchise agreement made, entered or renewed after the effective date of this act shall avoid or circumvent the requirements of this act, or violate its provisions, and no franchise agreement shall be performed after the date the licensee's license is issued or renewed in such a manner that the licensee avoids, circumvents or otherwise does not conform or comply with the requirements of this act. Notwithstanding the effective date of any franchise agreement, all licenses and renewals thereof are issued subject to all provisions of the dealers and manufacturers licensing act and any regulations in effect upon the date of issuance, as well as all future provisions of this act and any regulations which may become effective during the term of the license.

            (b) The provisions of this section shall be a part of and supplemental to the vehicle dealers and manufacturers licensing act.

History: L. 1998, ch. 71, § 3; July 1.

8-2438. Ownership and operation of new vehicle dealership by certain entities prohibited; exceptions.

            (a) Except as provided by this section, and notwithstanding any other provisions of the vehicle dealers and manufacturers licensing act, with respect to motor vehicles, a first stage manufacturer of vehicles 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 otherwise sell new vehicles at retail.

            (b) A first stage manufacturer or second stage manufacturer of vehicles, factory branch, distributor branch, or distributor, distributor or factory representative may own an interest in a franchised dealer or dealership, 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 distributor, 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 second 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 outright, but for no other purpose, a first stage manufacturer or second stage manufacturer of vehicles, factory branch, distributor branch, or distributor, distributor or factory representative, may temporarily own an interest in a new vehicle dealer or dealership if the first or second stage manufacturer 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 manufacturer of vehicles may own a minority interest in an entity that owns and operates a new vehicle dealer, licensed under the dealers and manufacturer'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 business facilities on or with which a new vehicle dealer operates its business, including the sale or repair of motor vehicles. Dealership includes premises 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 manufacturer or second stage manufacturer of vehicles, factory branch, distributor 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 representative, as the case may be, on the effective date of this act.

History: L. 2000, ch. 20, § 1; March 30, 2000.

8-2439. Delivery of motor vehicles to persons in state; who authorized to deliver.

            (a) In addition to any other restrictions or requirements imposed 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 delivered 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 delivered 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 vehicle'' shall have the same meaning as provided in section 1, and amendments 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 second stage converters for the construction and sale of motor vehicles produced 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 agreements 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.

History: L. 2000, ch. 20, § 2; March 30, 2000.

8-2440. Transactions executed outside state; when lemon law applicable.

            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 delivery 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.

History: L. 2000, ch. 20, § 3; March 30, 2000.

8-2441. Aiding or abetting violations of act prohibited.

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

History: L. 2000, ch. 20, § 4; March 30, 2000.

8-2442. Severability.

            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.

History: L. 2000, ch. 20, § 5; March 30, 2000.

8-2443. Act supplemental to vehicle dealers and manufacturers licensing act.

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

History: L. 2000, ch. 20, § 6; March 30, 2000.