Utah Warranty Reimbursement Law

13-14-204. Franchisor’s obligations related to service — Franchisor audits — Time limits.

(1) Each franchisor shall specify in writing to each of the franchisor’s franchisees licensed as a new motor vehicle dealer in this state:

(a) the franchisee’s obligations for new motor vehicle preparation, delivery, and warranty service, and recalls on the franchisor’s products;

(b) the schedule of compensation to be paid to the franchisee for parts, work, and service; and

(c) the time allowance for the performance of work and service.

(2) (a) The schedule of compensation described in Subsection (1) shall include reasonable compensation for diagnostic work, as well as repair service, parts, and labor.

(b) Time allowances described in Subsection (1) for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed.

(3) (a) As used in this Subsection (3):

(i) “Qualified repair” means a repair to a motor vehicle that:

(A) would have come within the franchisor’s new motor vehicle warranty but for such motor vehicle having exceeded the time or mileage limits of such warranty; and

(B) does not otherwise constitute warranty work.

(ii) “Qualified repair” does not include:

(A) routine maintenance, including without limitation the replacement of fluids, filters, non-electric vehicle batteries, bulbs, belts, brake pads, rotors, nuts, bolts, or fasteners;

(B) a replacement of or work on tires, wheels, or elements related to either, including without limitation wheel alignments and tire or wheel rotations;

(C) a repair for a government agency, an insurer, or an extended warranty or service contract provider;

(D) a repair that is the subject of a franchisor special event, promotion, or service campaign, or otherwise is subject to a franchisor discount;

(E) a repair of a motor vehicle owned by the franchisee or an employee of the franchisee;

(F) an installation of an accessory;

(G) a safety or vehicle emission inspection required by law;

(H) motor vehicle reconditioning;

(I) a part sold at wholesale;

(J) a repair or replacement with or to an aftermarket part;

(K) a franchisor-approved goodwill or policy repair or replacement; or

(L) a repair performed on a motor vehicle of a line-make other than that for which the franchisee is franchised by the franchisor.

(b) (i) Reasonable compensation of the franchisee for parts and service in warranty or recall repair work may not be less than the rates charged by the franchisee for like parts and service to retail customers.

(ii) In the case of a recreational vehicle franchisee, reimbursement for parts used in the performance of warranty repairs, including those parts separately warranted directly to the consumer by a recreational vehicle parts supplier, may not be less than the franchisee’s cost plus 20%.

(iii) For purposes of Subsection (3)(b)(ii), the term “cost” shall be that same price paid by a franchisee to a franchisor or supplier for the part when the part is purchased for a nonwarranty repair.

(c) A franchisee seeking to establish or modify the franchisee’s retail labor rate, retail parts markup, or both, shall submit in writing or electronically to the franchisee’s franchisor at the location and materially in the format theretofore specified by the franchisor in writing to the franchisee whichever of the following produces the fewer number of repair orders, all of which must be for repairs made no more than 180 days before such submission:

(i) all consecutive repair orders that include 100 sequential repair orders reflecting qualified repairs; or

(ii) all repair orders reflecting qualified repairs closed during any period of 90 consecutive days.

(d) A franchisee shall calculate the franchisee’s:

(i) retail labor rate by determining the total charges for labor in the qualified repairs submitted and dividing that amount by the total number of hours in the qualified repairs that generated such charges; and

(ii) retail parts markup by determining the total charges for parts in the qualified repairs submitted, dividing such amount by the franchisee’s total cost of the purchase of such parts, subtracting one, and multiplying by 100 to produce a percentage.

(e) (i) A retail labor rate or retail parts markup described in Subsection (3)(c) is effective 30 days after the franchisee submits the notice described in Subsection (3)(c), unless, within 30 days after receiving the franchisee’s submission, the franchisor delivers to the franchisee:

(A) a written objection to the material accuracy of the retail labor rate or retail parts markup; or

(B) a written request for supplemental repair orders pursuant to Subsection (3)(e)(ii).

(ii) (A) If a franchisor determines from the franchisee’s set of repair orders submitted pursuant to Subsections (3)(c) and (d) that the franchisee’s submission for a retail labor rate or retail parts markup is substantially higher than the franchisee’s current warranty rate, the franchisor may request, in writing, within 30 days after the franchisor’s receipt of the notice described in Subsection (3)(c), all repair orders closed within the period of 30 days immediately preceding, or 30 days immediately following, the set of repair orders submitted by the franchisee.

(B) All time periods under this section shall be suspended until the franchisee submits the supplemental repair orders described in Subsection (3)(e)(ii)(A).

(iii) If a franchisor requests supplemental repair orders described in Subsection (3)(e)(ii), the franchisor may, within 30 days after receiving the supplemental repair orders, calculate a proposed adjusted retail labor rate or retail parts markup, as applicable, based upon any set of the qualified repair orders submitted by the franchisee, if the franchisor:

(A) uses the same requirements applicable to the franchisee’s submission described in Subsection (3)(c);

(B) uses the formula to calculate the retail labor rate or retail parts markup described in Subsection (3)(d); and

(C) omits all charges in the repair orders described in Subsection (3)(a)(ii).

(f) A franchisee may not seek to establish or modify the franchisee’s:

(i) retail labor rate more frequently than once in a 12-month period; and

(ii) retail parts markup more frequently than once in a 12-month period.

(g) An approved adjusted retail labor rate or retail parts markup shall be effective on the later of 30 days after a franchisor receives:

(i) a submission described in Subsection (3)(c); or

(ii) supplemental repair orders described in Subsection (3)(e)(ii).

(h) A franchisor shall begin compensating the franchisee according to the effective retail labor rate and retail parts markup rate no later than 15 days after the effective date of the rate or rates.

(4) thru (11) [individual claims & recalls]

Sec. 13-14-201. Prohibited acts by franchisors – Affiliates – Disclosures

(1) A franchisor may not in this state:

(jj) impose any fee, surcharge, or other charge on a franchisee designed to recover the cost of a warranty repair for which the franchisor pays the franchisee;

(kk) except as provided by the audit provisions of this chapter, take an action designed to recover a cost related to a recall, including:

(i) imposing a fee, surcharge, or other charge on a franchisee;

(ii) reducing the compensation the franchisor owes to a franchisee;

(iii) removing the franchisee from an incentive program; or

(iv) reducing the amount the franchisor owes to a franchisee under an incentive program.

Although the statutory text provided above represented that codified and in effect in the respective state at the time of publication of the above, Armatus Dealer Uplift, LLC bears no responsibility for deviations of the above from versions thereof subsequently in effect as a result of future statutory amendments.