Kansas Warranty Reimbursement Law

Sec. 8-2415. Correction of warranty defects; compensation to dealer; promotional allowances or incentive payments; claim for reimbursement from dealer.

(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) (1) (A) A first or second stage manufacturer or distributor shall specify in writing to each of the first or second stage manufacturer’s or distributor’s dealers operating in this state the dealer’s obligations for preparation, delivery and warranty services related to the first or second stage manufacturer’s or distributor’s products.

(B) The first or second stage manufacturer or distributor shall compensate the dealer for the warranty services that the first or second stage manufacturer or distributor requires the dealer to provide, including warranty and recall obligations related to repairing and servicing motor vehicles of the first or second stage manufacturer or distributor and all parts and components authorized by the manufacturer to be installed in or manufactured for installation in such motor vehicles.

(2) The first or second stage manufacturer or distributor shall provide to the dealer a schedule of compensation that specifies reasonable compensation that the first or second stage manufacturer or distributor will pay to the dealer for such warranty services, including for parts, labor and diagnostics.

(A) In determining the schedule of compensation for parts, the first or second stage manufacturer or distributor may multiply the price paid by the dealer for parts, including all shipping costs and other charges, by the sum of one and the dealer’s average percentage markup. The dealer’s average percentage markup is calculated by subtracting one from the result of dividing the total amounts charged by the dealer for parts used in warranty-like repairs by the total cost to the dealer for the parts in the retail service orders submitted pursuant to subparagraph (C).

(B) In determining the schedule of compensation for labor-related warranty services, the first or second stage manufacturer or distributor may calculate the dealer’s retail labor rate by dividing the total amount of retail sales attributable to labor for warranty-like services by the number of hours of labor spent to generate the retail sales in the retail service orders submitted pursuant to subparagraph (C).

(C) (i) The dealer may establish its average percentage markup for parts or its labor rate by submitting to the first or second stage manufacturer or distributor copies of 100 sequential retail service orders paid by the dealer’s customers, or all of the dealer’s retail service orders paid by the dealer’s customers in a 90-day period, whichever is less, for services provided within the previous 180-day period. The first or second stage manufacturer or distributor shall not consider retail service orders or portions of retail service orders attributable to routine maintenance such as tire service or oil service.

(ii) Within 30 days of receiving the dealer’s submission, the first or second stage manufacturer or distributor may choose to audit the submitted orders. The first or second stage manufacturer or distributor shall then approve or deny the establishment of the dealer’s average percentage markup or labor rate. If the first or second stage manufacturer or distributor approves the establishment of the dealer’s average percentage markup or labor rate, the markup or rate calculated under this subparagraph shall go into effect 45 days after the date of the first or second stage manufacturer’s or distributor’s approval. If the first or second stage manufacturer or distributor denies the establishment of the dealer’s average percentage markup or labor rate, the dealer may file a complaint with the director of vehicles, and a hearing shall be held as provided by K.S.A. 8-2411, and amendments thereto. The first or second stage manufacturer or distributor shall have the burden of proof to establish that the first or second stage manufacturer’s or distributor’s denial was reasonable. If the director of vehicles finds that the denial was not reasonable, the denial shall be deemed a violation of this section and the director of vehicles shall then determine the dealer’s average percentage markup or labor rate for purposes of calculating a reasonable schedule of compensation. In making such a determination, the director of vehicles shall not consider retail service orders or portions of retail service orders attributable to routine maintenance such as tire service or oil service.

(iii) A first or second stage manufacturer or distributor shall not require a dealer to establish an average percentage markup or labor rate by a methodology, or by requiring the submission of information, that is unduly burdensome or time-consuming to the dealer, including, but not limited to, requiring part-by-part or transaction-by-transaction calculations.

(iv) A dealer shall not request a change in the dealer’s average percentage markup or labor rate more than once in any one-year period.

(3) The compensation to the dealer for warranty parts and labor shall not be less than the rates charged by the dealer for like parts and services to retail customers, provided the rates are reasonable.

(d) & (e) [Individual claims]

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.