28-4459. Manufacturer or distributor right of first refusal

464 words·~2 min read·/az/title-28/28-4459

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

A. If a change of all, or substantially all, ownership of a new motor vehicle dealership or transfer of all, or substantially all, dealership assets is proposed, a manufacturer or distributor may exercise a right of first refusal to acquire the dealership if all of the following requirements are met:

1. The manufacturer or distributor notifies the dealer in writing within sixty days after receipt of the completed application forms and related information generally used by a manufacturer or distributor to conduct its review and a copy of all agreements regarding the proposed transfer of its intent to exercise its right of first refusal or its rejection of the proposed transfer. If the manufacturer or distributor fails to notify the dealer of its exercise of its right of first refusal or its rejection of the proposed transfer within the sixty day period, the proposed transfer is deemed to be approved by the manufacturer or distributor.

2. The exercise of the right of first refusal results in the dealer receiving the same or greater compensation than the dealer negotiated or contracted to receive in connection with the proposed change of all, or substantially all, ownership of the dealership or transfer of all, or substantially all, dealership assets.

3. The proposed change of all, or substantially all, dealership assets does not involve the transfer of assets or the transfer or issuance of stock by the dealer or one or more dealer owners to a designated family member or members or the spouse, child, grandchild, spouse of a child or grandchild, brother, sister or parent of the dealer or one or more dealer owners or to a qualified manager, a partnership or a corporation controlled by any of those persons.

4. The manufacturer or distributor agrees to pay the reasonable expenses, including reasonable attorney fees that do not exceed the usual, customary and reasonable fees charged for similar work done for other clients, incurred by the proposed new owner and transferee before the manufacturer's or distributor's exercise of its right of first refusal in negotiating and implementing the contract for the proposed change of all, or substantially all, ownership of the dealership or transfer of all, or substantially all, dealership assets.

Notwithstanding the provisions of this paragraph, a manufacturer or distributor shall not pay those expenses and attorney fees if the dealer has not submitted or caused to be submitted to the manufacturer or distributor an accounting of those expenses within twenty days after the dealers' receipt of the manufacturer's or distributor's written request for the accounting. This accounting may be requested by a manufacturer or distributor before exercising its right of first refusal.

B. A manufacturer or distributor may not use or threaten to use the exercise of the right of first refusal in bad faith.