Extends certain protocols applicable to motor vehicle manufacturers to their distributors and factory branches, as well as updates warranty reimbursement and recall obligation policies.
S0885 revises Rhode Island’s motor vehicle dealer franchise law in Chapter 31-5.1 to apply many existing dealer protections and procedures not only to manufacturers, but also to distributors and factory branches. The bill covers a wide range of dealer-franchisor issues, including succession of dealership ownership by family members, notice and protest procedures for establishing or relocating dealerships, delivery and preparation obligations, warranty reimbursement, recall compensation, transportation damage, risk of loss, and promotional incentive claims.
A major focus of the bill is updating how dealers are paid for warranty and recall work. It requires compensation at the dealer’s retail rate for parts and labor, sets procedures for dealers to establish those rates, limits how manufacturers may challenge them, and adds protections against chargebacks based only on clerical or technical errors. It also creates specific compensation rules when recall parts are unavailable and a stop-sale or do-not-drive order is issued, including monthly payments tied to the vehicle’s value. The bill further clarifies that these rules apply to a broad set of agreements between dealers and franchisors and that the act takes effect immediately upon passage.
The bill would amend several sections of Rhode Island General Laws Chapter 31-5.1, expanding statutory obligations and protections to distributors and factory branches alongside manufacturers. It would change the legal framework governing franchise succession, dealership market-area protests, warranty and recall reimbursement, promotional programs, transportation damage liability, and risk-of-loss rules, while also adding procedural deadlines and burden-of-proof standards in disputes before the Department of Revenue. Dealers, manufacturers, distributors, and factory branches would all be directly affected, especially in warranty reimbursement, recall compensation, and dealership relocation or expansion disputes.
The available context shows no recorded committee testimony or votes, so there is no documented floor or committee sentiment in the materials provided. Based on the bill text and summary, the measure appears generally pro-dealer, strengthening dealer rights and compensation rules and extending those protections to additional franchisor entities. The absence of recorded opposition or amendments in the provided history means sentiment cannot be measured beyond the bill’s apparent policy direction.
The most likely points of contention are the bill’s expansion of obligations to distributors and factory branches, the increased compensation requirements for warranty and recall work, and the limits placed on manufacturers’ ability to challenge dealer-submitted labor and parts rates. Manufacturers and distributors may object to the burden of proof, the deemed-approval timelines, restrictions on chargebacks, and the stop-sale compensation formula, while dealers are likely to support those provisions as necessary to ensure fair reimbursement and protect franchise investments. Another possible area of dispute is the bill’s detailed market-area protest process for new or relocated dealerships, which preserves strong procedural rights for existing dealers.