190.046 Compensation to dealer for work performed under warranty -- "Reasonable compensation" -- Proof. - Kentucky Statutes

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190.046 Compensation to dealer for work performed under warranty -- "Reasonable compensation" -- Proof. (1) Notwithstanding the terms of any franchise agreement, each motor vehicle manufacturer or distributor, doing business within this Commonwealth, shall
assume all responsibility for and shall defend, indemnify, and hold harmless its
motor vehicle dealers against any loss, damages, and expenses, including legal
costs, arising out of complaints, claims, recall repairs or modifications or factory
authorized or directed repairs, or lawsuits resulting from warranty defects, which
shall include structural or production defects; defects in the assembly; or design of
motor vehicles, parts, accessories; or other functions beyond the control of the
dealer, including without limitation, the selection of parts or components for the
vehicle. Each manufacturer or distributor shall pay reasonable compensation to any
authorized dealer who performs work to repair defects, or to repair any damage to
the manufacturer's or distributor's product sustained while the product is in transit to
the dealer, when the carrier or the means of transportation is designated by the
manufacturer or distributor. Each manufacturer or distributor shall provide to its
dealers with each model year a schedule of time allowances for the performance of
warranty repair work and services, which shall include time allowances for the
diagnosis and performance of warranty work and service time, and shall be
reasonable and adequate for the work to be performed. (2) In the determination of what constitutes "reasonable compensation" under this section, the principal factor to be considered shall be the amount of money that the
dealer is charging its other customers for the same type service or repair work.
Other factors may be considered, including the compensation being paid by other
manufacturers or distributors to their dealers for work; and the prevailing amount of
money being paid or charged by the dealers in the city or community in which the
authorized dealer is doing business. "Reasonable compensation" shall include
diagnosing the defect; repair service; labor; parts and administrative and clerical
costs. The compensation of a dealer shall not be less than the amount charged by the
dealer for like services and parts, which minimum compensation for parts shall be
dealer cost plus thirty percent (30%) gross profit, to retail customers for
nonwarranty service and repairs, or less than the amounts indicated for work on the
schedule of warranty compensation required to be filed by the manufacturer with
the commission as a part of the manufacturer's license application by KRS 190.030. (3) A manufacturer or distributor shall not require unreasonable proof to establish "reasonable compensation" or delay reimbursement of payment to the dealer beyond
thirty-five (35) days from the submission by mail of a valid warranty claim. If a
valid warranty claim is not paid within forty-five (45) days, the dealer may give the
manufacturer one (1) copy of the dealer's related repair order bearing the customer's
signature, the dealer's signature, the date the work was completed, the vehicle serial
number or identification number, the odometer reading, the date of delivery of the
vehicle, a list of the parts and supplies used if applicable, a brief general description
of the defect, and the amount of money charged the manufacturer or distributor for
the work. If, after fifteen (15) days, the valid warranty claim is still not paid, the dealer may deduct a like amount from any moneys due or owing to the manufacturer
or distributor. The dealer shall hold the defective part for inspection by the
manufacturer or distributor for a period of time not to exceed ninety (90) days from
the time the warranty claim is submitted. The manufacturer or distributor shall not
unfairly discriminate against any dealer in the application of warranty, policy, and
procedure or deny any valid warranty order claim submitted by a franchised dealer
within thirty (30) days from completion of the work or longer if existing
manufacturer-dealer relationships apply. Upon the written request of the dealer for
valid reasons, the manufacturer shall extend the submission time. Any dispute
between the dealer and the manufacturer or distributor shall be subject to the
provisions of KRS 190.057. (4) All audits by a manufacturer shall be limited to a period of one (1) year prior to the date of the audit. Effective: February 22, 2000
History: Amended 2000 Ky. Acts ch. 23, sec. 4, effective February 22, 2000. -- Amended 1992 Ky. Acts ch. 452, sec. 5, effective July 14, 1992. -- Amended 1982
Ky. Acts ch. 373, sec. 7, effective July 15, 1982. -- Amended 1978 Ky. Acts ch. 182,
sec. 2, effective June 17, 1978. -- Amended 1974 Ky. Acts ch. 107, sec. 1. -- Created
1972 Ky. Acts ch. 75, sec. 2.