Georgia Warranty Reimbursement Law

§ 10-1-641. Dealer’s predelivery preparation, warranty service, and recall work obligations to be provided in writing; recovery of costs; “stop-sale” defined

(a) (1) Each franchisor, manufacturer, or distributor:

(A) Shall specify in writing to each of its dealers in this state the dealer’s obligations for predelivery preparation including the repair of damages incurred in the transportation of vehicles as set forth in Code Section 10-1-642, recall work, and warranty service on its products;

(B) Shall, at the election of the dealer, reasonably compensate the dealer for parts and labor provided for such warranty service work as provided in paragraph (2) of this subsection;

(C) Shall provide the dealer with a schedule of compensation to be paid such dealer for parts, work, and service in connection therewith; and

(D) Shall provide the dealer with a schedule of the time allowance for the performance of such work and service. Any such schedule of compensation shall include reasonable compensation for diagnostic work, repair service, and labor. Time allowances for the diagnosis and performance of such work and service shall be reasonable and adequate for the work to be performed.

(2) (A) In the determination of what constitutes reasonable compensation for parts and labor under this Code section, the principal factors to be considered shall be the retail rates customarily charged by the dealer, as established pursuant to this paragraph, and the rates for parts and labor charged by other similarly situated franchised dealers in a comparable geographic area in this state offering the same line-make vehicles.

(B) The retail rate customarily charged by the dealer for parts shall be established by the dealer submitting to the franchisor, manufacturer, or distributor 100 sequential nonwarranty customer-paid service repair orders which contain warranty-like repairs or 90 consecutive days of nonwarranty customer-paid service repair orders which contain warranty-like parts, whichever is less. Such service repair orders shall cover repairs made no more than 180 days before the submission. If the franchisor, manufacturer, or distributor determines, from any set of repair orders submitted under this subparagraph, that the retail markup rate for parts calculated is substantially higher or lower than the rate currently on record with the franchisor, manufacturer, or distributor, then the franchisor, manufacturer, or distributor may request additional documentation for a period of either 60 days prior to or 60 days subsequent to the time period for which the repair orders were submitted for purposes of an adjustment. The dealer’s retail rate percentage for parts shall be calculated by determining the dealer’s total parts sales in the submitted repair orders and dividing that amount by the dealer’s total cost for purchase of those parts, subtracting one from that amount, and then multiplying by 100. The declared retail rate shall be approved or disapproved within 30 days following submission by the dealer. The declared retail rate shall go into effect 30 days following approval by the franchisor, manufacturer, or distributor, unless such franchisor, manufacturer, or distributor disapproves and timely contests the dealer’s declared rate. If a franchisor, manufacturer, or distributor fails to disapprove within 30 days following submission by the dealer, the declared retail rate shall be deemed approved. A franchisor, manufacturer, or distributor may contest the dealer’s declared parts rate not later than 30 days after submission and declaration of the parts rate by the dealer by reasonably substantiating that the rate is unreasonable in light of the practices of all other similarly situated franchised dealers in a comparable geographic area in this state offering the same line-make vehicles. In contesting the dealer’s declared rate, a franchisor, manufacturer, or distributor shall provide a written explanation of the reasons for disagreement with the declared rate. If the declared parts rate is contested, then the franchisor, manufacturer, or distributor shall propose an adjustment of the rate. If the franchisor, manufacturer, or distributor contests the dealer’s declared parts rate, the parties shall attempt to resolve the dispute through an internal dispute resolution procedure of the franchisor, manufacturer, or distributor, if available, provided that such procedure occurs within a reasonable amount of time, not to exceed 30 days after notification of disagreement with the dealer’s declared rate. If the internal dispute resolution procedure is unsuccessful or does not occur in a timely manner, the dealer may file a petition with the commissioner not later than 60 days after receipt of the proposed adjustment by the franchisor, manufacturer, or distributor or not later than 30 days after conclusion of the internal dispute resolution procedure, whichever is later. If such a petition is filed, the commissioner shall inform the franchisor, manufacturer, or distributor that a timely petition has been filed and that a hearing will be held on such issue. In any hearing held pursuant to this subparagraph, the burden of proof shall be upon the franchisor, manufacturer, or distributor to demonstrate that the parts rate declared by the dealer was unreasonable and not in accordance with this subparagraph.

(C) The retail rate customarily charged by the dealer for labor may be established by submitting to the franchisor, manufacturer, or distributor 100 sequential nonwarranty customer-paid service repair orders for warranty-like repairs or 90 consecutive days of customer-paid service repair orders for warranty-like repairs, whichever is less. Such service repair orders shall cover repairs made no more than 180 days before the submission. If the franchisor, manufacturer, or distributor determines, from any set of repair orders submitted under this subparagraph, that the retail rate for labor calculated is substantially higher or lower than the rate currently on record with the franchisor, manufacturer, or distributor, then the franchisor, manufacturer, or distributor may request additional documentation for a period of either 60 days prior to or 60 days subsequent to the time period for which the repair orders were submitted for purposes of an adjustment. The retail rate for labor shall be calculated by determining the dealer’s total labor sales from the submitted repair orders and dividing that amount by the total number of hours that generated those sales. The declared retail labor rate shall be approved or disapproved within 30 days following submission by the dealer. The declared retail labor rate shall take effect 30 days following approval by the franchisor, manufacturer, or distributor unless such franchisor, manufacturer, or distributor disapproves and timely contests the dealer’s declared rate. A franchisor, manufacturer, or distributor may contest the dealer’s declared labor rate not later than 30 days after submission and declaration of the labor rate by the dealer by reasonably substantiating that such rate is unreasonable in light of the practices of all other similarly situated franchised motor vehicle dealers in a comparable geographic area in this state offering the same line-make vehicles. If the declared labor rate is contested, then the franchisor, manufacturer, or distributor shall propose an adjustment of the declared retail labor rate. If the franchisor, manufacturer, or distributor contests the dealer’s declared labor rate, the parties shall attempt to resolve the dispute through an internal dispute resolution procedure of the franchisor, manufacturer, or distributor, if available, provided that such procedure occurs within a reasonable amount of time not to exceed 30 days after notification of disagreement with the dealer’s declared rate. If the internal dispute resolution procedure is unsuccessful or does not occur in a timely manner, the dealer may file a petition with the commissioner not later than 60 days after receipt of the proposed adjustment by the franchisor, manufacturer, or distributor or not later than 30 days after conclusion of the internal dispute resolution procedure, whichever is later. If such a petition is filed, the commissioner shall inform the franchisor, manufacturer, or distributor that a timely petition has been filed and that a hearing will be held on such issue. In any hearing held pursuant to this subparagraph, the burden of proof shall be upon the franchisor, manufacturer, or distributor to demonstrate that the labor rate declared by the dealer was unreasonable and not in accordance with this subparagraph.

(D) In calculating the retail rate customarily charged by the dealer for parts and labor for purposes of this paragraph, the following work shall not be included in the calculation:

(i) Repairs for franchisor, manufacturer, or distributor special events, specials, or promotional discounts for retail customer repairs;

(ii) Parts sold at wholesale;

(iii) Routine maintenance not covered under any retail customer warranty, such as fluids, filters, and belts not provided in the course of repairs;

(iv) Nuts, bolts, fasteners, and similar items which contain no individual part number;

(v) Tires; and

(vi) Vehicle reconditioning.

(E) If a franchisor, manufacturer, or distributor furnishes a part or component to a dealer to use in performing repairs under a recall, campaign service action, or warranty repair at no cost to the dealer, the franchisor, manufacturer, or distributor shall compensate the dealer for the authorized repair part or component in the same manner as warranty parts compensation under this Code section by paying the dealer the retail rate markup on the cost for the part or component as listed in the price schedule of the franchisor, manufacturer, or distributor less the cost for the part or component.

(F) No franchisor, manufacturer, or distributor shall require a dealer to establish the retail rate customarily charged by the dealer for parts and labor by an unduly burdensome or time consuming method or by requiring information that is unduly burdensome or time consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations. No dealer shall declare a retail rate for parts or labor or both more than once in one calendar year.

(b) (1) Franchisors, manufacturers, and distributors shall include in written notices of factory recalls to dealers the expected date by which necessary parts and equipment will be available to dealers for the repair or replacement of recalled parts and equipment. Franchisors, manufacturers, and distributors shall compensate any dealers in this state for repairs affected by all recalls.

(2) All such claims shall be either approved or disapproved within 30 days after their receipt on forms and in the manner specified by the franchisor, manufacturer, or distributor, and any claim not specifically disapproved in writing within 30 days after the receipt shall be construed to be approved and payment must follow within 30 days.

(c) Subject to Code Section 10-1-645, a franchisor, manufacturer, or distributor shall not recover its costs from dealers within this state, including a surcharge imposed on a dealer solely intended to recover the cost of reimbursing the dealer for parts and labor pursuant to this Code section, provided that a franchisor, manufacturer, or distributor shall not be prohibited from increasing prices for vehicles or parts in the normal course of business.

(d) (1) For purposes of this subsection, the term “stop-sale” means a notification issued by a manufacturer to its franchised dealers stating that certain used motor vehicles in inventory shall not be sold or leased, at either retail or wholesale, due to a federal safety recall for a defect or a noncompliance or a federal emissions recall.

(2) A franchisor, manufacturer, or distributor shall compensate its dealers for all labor and parts required by the manufacturer to perform recall repairs. Compensation for recall repairs shall be reasonable. If parts or a remedy are not reasonably available to perform a recall service or repair on a used vehicle held for sale by a dealer authorized to sell and service new motor vehicles of the same line-make within 30 days of the manufacturer issuing the initial notice of recall, and the manufacturer has issued a stop-sale or do not drive order on the vehicle, the manufacturer shall compensate the dealer at a prorated rate of at least 1 percent of the value of the vehicle per month beginning on the date that is 30 days after the date on which the stop-sale or do not drive order was provided to the dealer to the earlier of the date the recall or repair parts or remedy are made available or the date the dealer sells, trades, transfers, or otherwise disposes of the affected used motor vehicle.

(3) The value of a used motor vehicle shall be the average trade-in value for used motor vehicles as indicated in an independent third party guide for the year, make, and model of the recalled vehicle.

(4) This subsection shall apply only to used motor vehicles subject to safety or emissions recalls pursuant to and recalled in accordance with federal law and regulations adopted thereunder and where a stop-sale or do not drive order has been issued and repair parts or remedy remain unavailable for 30 days or longer.

(5) This subsection shall apply only to dealers holding an affected used motor vehicle for sale in inventory at the time a stop-sale or do not drive order is issued or which was taken into the used motor vehicle inventory of the dealer as a consumer trade-in incident to the purchase of a new motor vehicle from the dealer after the stop-sale or do not drive order was issued, and that are a line-make that the dealer is franchised to sell or on which the dealer is authorized to perform recall repairs.

(6) It shall be a violation of this subsection for a manufacturer to reduce the amount of compensation otherwise owed to an individual dealer, whether through a chargeback, removal of the individual dealer from an incentive program, or reduction in amount owed under an incentive program, solely because the dealer has submitted a claim for reimbursement under this subsection. The provisions under this subsection shall not apply to an action by a manufacturer that is applied uniformly among all dealers of the same line-make in this state.

(7) All reimbursement claims made by dealers pursuant to this subsection for recall remedies or repairs, or for compensation where no part or repair is reasonably available and the vehicle is subject to a stop-sale shall be subject to the same limitations and requirements as a warranty reimbursement claim made under this subsection. In the alternative, a manufacturer may compensate its franchised dealers under a national recall compensation program provided the compensation under the program is equal to or greater than that provided under this subsection; or the manufacturer and dealer otherwise agree.

(8) A manufacturer may direct the manner and method in which a dealer must demonstrate the inventory status of an affected used motor vehicle to determine eligibility under this subsection, provided that the manner and method may not be unduly burdensome and may not require information that is unduly burdensome to provide.

(9) Nothing in this subsection shall require a manufacturer to provide total compensation to a dealer which would exceed the total average trade-in value of the affected used motor vehicle as originally determined under paragraph (3) of this subsection.

(10) Any remedy provided to a dealer under this subsection is exclusive and may not be combined with any other state or federal recall compensation remedy. HISTORY: Code 1981, § 10-1-641, enacted by Ga. L. 1993, p. 1585, § 2; Ga. L. 1999, p. 1194, § 3; Ga. L. 2010, p. 988, § 6/HB 1072; Ga. L. 2017, p. 515, § 1/HB 469.

§ 10-1-645. Uniform warranty reimbursement policy amongst dealers

(a) Any manufacturer or franchisor and at least a majority of its dealers of the same line make may agree to a uniform warranty reimbursement agreement in an express written contract, executed by a dealer principal or authorized designee of the dealer principal that specifically cites this Code section. The agreement shall only involve either reimbursement for parts used in warranty repairs or the use of a uniform time standards manual, or both. Reimbursement for parts under the agreement shall be used instead of the dealers’ prevailing retail rate charged by that dealer for the same parts as defined in Code Section 10-1-641 to calculate compensation due from the franchisor for parts used in warranty repairs. This Code section does not authorize a franchisor and its dealers to establish a uniform hourly labor reimbursement.

(b) A manufacturer or franchisor that proposes a uniform reimbursement agreement must provide all of its line make dealers a minimum of 30 days to consider such proposal which shall be in writing and provided to the dealer principal or authorized designee of the dealer principal via certified mail or other trackable delivery method, including electronic transmission, to which a notice containing the following language in all capital letters shall be affixed:

GEORGIA LAW ALLOWS TWO ALTERNATIVE METHODS OF WARRANTY REIMBURSEMENT:

1. DEALERS MAY SUBMIT A REQUEST TO RECEIVE RETAIL RATE PURSUANT TO O.C.G.A. SECTION 10-1-641; OR

2. A MAJORITY OF LINE MAKE DEALERS MAY AGREE TO A UNIFORM WARRANTY REIMBURSEMENT AGREEMENT, AS PROPOSED WITH THIS NOTICE.

IN THE EVENT A MAJORITY OF THE SAME LINE MAKE DEALERS AGREE TO THE ATTACHED UNIFORM WARRANTY REIMBURSEMENT AGREEMENT, DEALERS THAT OPT TO SEEK RETAIL RATE PURSUANT TO O.C.G.A. SECTION 10-1-641 MAY BE SUBJECT TO A COST RECOVERY SURCHARGE ON ALL NEW VEHICLE INVOICES.

(c) Each franchisor shall only have one such agreement with each line make. Any such agreement shall:

(1) Establish a uniform parts reimbursement rate. The uniform parts reimbursement rate shall be not less than the greater of the nationally established rate set forth in the franchisor’s sales and service agreement or other warranty manual or policy or the franchisor’s national average warranty parts reimbursement rate in effect at the time such agreement becomes effective;

(2) Apply to all warranty repair orders written during the period that the agreement is effective;

(3) Be available, during the period it is effective, to any dealer of the same line make at any time and on the same terms; and

(4) Be for a term not to exceed three years so long as any party to the agreement may terminate the agreement upon the annual anniversary of the agreement and with 30 days’ prior written notice; however, the agreement shall remain in effect for the term of the agreement regardless of the number of dealers of the same line make that may terminate the agreement.

(d)(1) As used in this subsection, the term ‘costs’ means the difference between the uniform reimbursement rate set forth in an agreement entered into pursuant to this Code section and the retail rate received by an individual dealer pursuant to Code Section 10-1-641.

(2) A manufacturer or franchisor that enters into a uniform warranty reimbursement agreement as provided in this Code section may seek to recover its costs from only those dealers that are receiving their retail rate pursuant to Code Section 10-1-641 as follows:

(A) The costs shall be recovered only by increasing the invoice price on new vehicles received by those dealers not a party to an agreement under this Code section; and

(B) Price increases imposed for the purpose of recovering costs under this Code section may vary from time to time and from model to model but shall apply to all dealers of the same line make in the State of Georgia that have requested reimbursement for warranty repairs at their prevailing retail rate.

(e) If a manufacturer or franchisor enters into a uniform reimbursement agreement with its dealers, the manufacturer or franchisor shall, within 60 days of entering into such agreement, certify under oath to the Department of Revenue that a majority of the dealers of that line make have entered into such an agreement and shall file a sample copy of the agreement, the required notice, a list of the line make dealers that have agreed to the uniform warranty reimbursement, and the date upon which such agreement was made. On an annual basis, the manufacturer shall certify under oath to the department that the parts warranty reimbursement in the agreement is no less than the greater of the franchisor’s nationally established rate or the national average parts reimbursement rate and that the reimbursement costs it recovers under subsection (d) of this Code section do not exceed the amounts authorized by subsection (d) of this Code section. The manufacturer or franchisor shall maintain for a period of three years a file that contains the information upon which its certification is based.

(f) If a manufacturer or franchisor and its dealers do not enter into an agreement pursuant to this Code section, and for any matter that is not the subject of an agreement, this Code section shall have no effect whatsoever.

(g) For purposes of this Code section, a uniform time standard manual is a document created by a franchisor that establishes the time allowances for the diagnosis and performance of warranty work and service. The allowances shall be reasonable and adequate for the work and service to be performed. Each franchisor shall have a reasonable and fair process that allows a dealer to request a modification or adjustment of a standard or standards included in such a manual.

HISTORY: Code 1981, § 10-1-645, enacted by Ga. L. 2003, p. 445, § 1; Ga. L. 2005, p. 334, § 4-3/HB 501

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.