Please refer to Governing Statutes for more information. “Not specified” indicates that an issue is not addressed specifically in the particular statutes. Please send any updates to editors@dealernews.com
ALABAMA – “The compensation that the manufacturer or distributor pays to the new motor vehicle dealer for parts used in warranty or recall related service shall be fair and reasonable and, at the option of the new motor vehicle dealer, may be determined pursuant to subsection E of this section…. A manufacturer or distributor may not recover all or any portion of its costs for compensating a dealer for warranty parts and service, including parts and service associated with vehicle recalls, either by reduction in the amount due the dealer or by separate charge, surcharge, administrative fee or other imposition.”
ALASKA – Not specified
ARIZONA – The new motor vehicle dealer’s retail labor rate “shall be determined by dividing the amount of the dealer’s total labor sales contained in the submitted repair orders by the total number of labor hours that generated those sales. The new motor vehicle dealer’s retail rate for parts shall be a percentage determined by dividing the total sales for parts in the submitted repair orders by the new motor vehicle dealer’s total cost for those parts, minus one, and then multiplied by [100] to produce a percentage. Declared rates are presumed to be fair and reasonable except that a manufacturer or distributor, within [30] days after receiving the new motor vehicle dealer’s submission, may rebut the presumption by reasonably substantiating that the rate or rates are inaccurate or unreasonable compared to other similarly situated same line-make new motor vehicle dealers in the state.
ARKANSAS – Prevailing retail rates, compared to other dealers in the area (Act 1055)
CALIFORNIA – In determining the adequacy and fairness of the compensation, the franchisee’s effective labor rate charged to its various retail customers may be considered together with other relevant criteria.
COLORADO – Not specified
CONNECTICUT – Prevailing retail price.
DELAWARE – Dealer’s rate charged to non-warranty customers for parts and labor “shall be established by the dealer submitting to the manufacturer 100 sequential customer paid service repair orders or 90 days of customer paid service repair orders, whichever is less, covering like repairs made no more than 180 days before the submission of such customer paid service repair orders and declaring the schedule of compensation.” Statute contains exclusions from the calculation.
FLORIDA – The compensation of a dealer for warranty labor may not be less than the lowest retail labor rates actually charged by the dealer for like non-warranty labor as long as such rates are reasonable.
GEORGIA – Reasonable compensation for parts reimbursement and labor rates under this Code section, the principal factors to be considered “shall be the retail price paid to dealers for parts and the prevailing hourly labor rates paid to dealers doing the repair, work, or service and to other dealers in the community in which the dealer doing the repair, work, or service is doing business for the same or similar repair, work, or service. However, in no event shall parts reimbursement paid to the dealer be less than the retail price for such parts being paid to such dealer by non-warranty customers for non-warranty parts replacement, and in no event shall the hourly labor rate paid to a dealer for such warranty repair, work, or service be less than the rate charged by such dealer for like repair, work, or service to non-warranty customers for non-warranty repair, work, or service.”
HAWAII – In no event shall any manufacturer or distributor pay its dealers a markup on parts for warranty work that is less than that charged by the dealer to the retail customers of the dealer; provided that such dealer’s retail parts markup is not unreasonable when compared with that of same line make authorized franchise dealers of the manufacturer or distributor for identical merchandise or services in the State.
IDAHO – Manufacturer may not “unfairly discriminate among its dealers with respect to warranty reimbursement.”
ILLINOIS – In no event shall such compensation fail to include reasonable compensation for diagnostic work, as well as repair service, labor and parts. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. In the determination of what constitutes reasonable compensation … the principal factor to be given consideration shall be the prevailing wage rates being paid by the dealer in the RMA in which the motor vehicle dealer is doing business, and in no event shall such compensation of a motor vehicle dealer for warranty service be less than the rates charged by such dealer for like service to retail customers for non-warranty service and repairs.
INDIANA – Set at dealer’s retail rate for parts and labor; allows uniform warranty reimbursement agreement to be established.
IOWA – Manufacturer may not disallow a charge after 12 months.
KANSAS – Provides for reasonable compensation.
KENTUCKY – Retail rates specified. Manufacturer is to provide for each model year a schedule of time allowances for the performance of warranty repair work; the schedule shall be reasonable and adequate for the work performed.
LOUISIANA – In no event shall any manufacturer or distributor pay its motorcycle or all-terrain vehicle dealers at a price or rate for warranty work that is less than that charged by the dealer to its retail customers for non-warranty work of like kind. Warranty work includes parts and labor performed.
MAINE – (a) Reimburse the franchisee for any parts provided at the published manufacturer’s suggested retail price at the time of retail sale; [1997, c. 717, §4 (AMD)] (b) Reimburse the franchisee for any labor performed at the retail rate customarily charged by that franchisee for the same labor when not performed in satisfaction of a warranty. The franchisee’s rate for labor not performed in satisfaction of a warranty must be posted in a place conspicuous to its service customers.
MARYLAND – Not specified
MASSACHUSETTS – Retail rates specified.
MICHIGAN – Reasonable retail rates specified.
MINNESOTA – In no event shall the schedule of compensation fail to include reasonable compensation for diagnostic work, as well as repair service, parts and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. The hourly labor rate paid to and the reimbursement for parts purchased by a dealer for warranty services shall not be less than the rate charged by the dealer for like service to non-warranty customers for non-warranty service and repairs.
MISSISSIPPI – Not specified
MISSOURI – Prevailing rates specified. Schedule of compensation shall include reasonable compensation for diagnostic work, as well as repair service and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work performed.
MONTANA – Not specified
NEBRASKA – The schedule of compensation shall include reasonable compensation for diagnostic work, as well as repair service, parts, and labor. Time allowances for the diagnosis and performance of warranty work and service shall be reasonable and adequate for the work to be performed. Based on prevailing market rates.
NEVADA – Fair compensation includes diagnosis and reasonable administrative and clerical costs. The dealer’s compensation for parts and labor to satisfy a warranty must not be less than the amount of money charged to its various retail customers for parts and labor that are not covered by a warranty. If parts are supplied by the manufacturer, including exchanged parts and assembled components, the dealer is entitled with respect to each part to an amount not less than the dealer’s normal retail markup for the part.
NEW HAMPSHIRE – Retail rates specified.
NEW JERSEY – An amount equal to the prevailing retail price charged by such motor vehicle franchisee for such services and parts in circumstances where such services are rendered or such parts supplied other than pursuant to warranty; provided that such motor vehicle franchisee’s prevailing retail price is not unreasonable when compared with that of the holders of motor vehicle franchises from the same motor vehicle franchisor for identical merchandise or services in the geographic area in which the motor vehicle franchisee is engaged in business.
NEW MEXICO – A manufacturer shall compensate a dealer for labor and diagnostic work at the rates charged by the dealer to its retail customers for such work. If a manufacturer can demonstrate that the rates unreasonably exceed those of all other franchised motor vehicle dealers in the same RMA offering the same or a competitive motor vehicle line, the manufacturer is not required to honor the rate increase proposed by the dealer. If the manufacturer is not required to honor the rate increase proposed by the dealer, the dealer is entitled to resubmit a new proposed rate for labor and diagnostic work. A dealer shall not be granted an increase in the average percentage markup or labor and diagnostic work rate more than twice in one calendar year.
NEW YORK – Fair and reasonable compensation shall not be less than the price and rate charged by the franchised motor vehicle dealer for like services to non-warranty and/or non-service contract customers.
NORTH CAROLINA – “Time allowances for the performance of warranty work and service shall be reasonable and adequate for the work to be performed. The compensation which must be paid under this section must be reasonable, provided, however, that under no circumstances may the reasonable compensation under this section be in an amount less than the dealer’s current retail labor rate and the amount charged to retail customers for the manufacturer’s or distributor’s original parts for non-warranty work of like kind, provided such amount is competitive with the retail rates charged for parts and labor by other franchised dealers within the dealer’s market.”
NORTH DAKOTA – The hourly labor rate paid by a motor vehicle manufacturer to the dealer for warranty services may not be less than the average rate charged by the dealer for like service to non-warranty customers for non-warranty service as provided under subsection 5.A. The motor vehicle manufacturer may not reimburse a dealer for parts used in the performance of warranty repair at a lower rate than the average retail rate customarily charged by the dealer for these parts as provided under subsection 4.
OHIO – Each franchisor shall compensate each of its franchisees for labor and parts used to fulfill warranty and recall obligations of repair and servicing at rates not less than the rates charged by the franchisee to its retail customers for warranty-like labor and parts for non-warranty work.
OKLAHOMA – Not specified
OREGON – A manufacturer, distributor or importer may not pay an hourly rate to a dealer that is less than the rate the dealer charges non-warranty customers for non-warranty service and repairs. Reimbursement for parts, other than parts used to repair the living facilities of motor homes, that the dealer purchases for use in performing pre-delivery and warranty service must be the amount the dealer charges non-warranty customers, as long as the amount is not unreasonable.
PENNSYLVANIA – Compensation for labor used in warranty service shall be at the dealer’s retail rate. Compensation for parts, including major assemblies used in warranty service, shall be at the dealer’s retail rate. Statute includes formulae for both.
RHODE ISLAND – Reimbursement for warranty repairs or diagnostic work shall be at the dealer retail rate in effect at the time the warranty repair or diagnostic work is performed.
SOUTH CAROLINA – The hourly labor rate paid to a dealer for warranty services must not be less than the rate charged by the dealer for like service to non-warranty customers for non-warranty service and repairs unless the rate is determined to be unreasonable. Dealers must be reimbursed for the current manufacturer suggested retail price for parts used on warranty work.
SOUTH DAKOTA – The hourly labor rate paid to the dealer for warranty services may not be less than the rate charged by the dealer for like service to non-warranty customers for non-warranty service. Reimbursement for parts used in the performance of warranty repair may not be less than the current retail rate customarily charged by the vehicle dealer for such parts. Each manufacturer, in establishing a schedule of compensation for warranty work, shall rely on the vehicle dealer’s written schedule of hourly labor rates and parts, and may not obligate any vehicle dealer to engage in unduly burdensome documentation thereof, including, without limitation, obligating vehicle dealers to engage in transaction by transaction calculations.
TENNESSEE – Not specified
TEXAS – Requires manufacturer to bear costs of recall.
UTAH – Not specified
VERMONT – The hourly rate paid to a new motor vehicle dealer shall not be less than the rate charged by the dealer to customers for non-warranty service and repairs. Each manufacturer shall compensate each of its dealers for parts used to fulfill warranty, pre-delivery and recall obligations of repair and servicing at amounts not less than the retail amounts customarily charged by the dealer to its retail customers for like parts for non-warranty work. The amounts established by a dealer to its retail customers for labor and like parts for non-warranty work are deemed to be fair and reasonable compensation; provided, however, a manufacturer may rebut such a presumption by showing that such amount so established is unfair and unreasonable in light of the practices of at least four other franchised motor vehicle dealers in the vicinity offering the same line-make or a similar competitive line-make.
VIRGINIA – Compensation of a dealer for warranty parts, service, and diagnostic work shall not be less than the amounts charged by the dealer for the manufacturer’s or distributor’s original parts, service, and diagnostic work to retail customers for non-warranty service, parts and diagnostic work installed or performed in the dealer’s service department unless the amounts are not reasonable.
WASHINGTON – Each manufacturer shall provide each of its dealers with a schedule of compensation to be paid to the dealer for any warranty work or service, including parts, labor and diagnostic work, required of the dealer by the manufacturer in connection with the manufacturer’s products, and for work on and preparation of motorsports vehicles received from the manufacturer. The compensation may not be less than the rates reasonably charged by the dealer for like services and parts to retail customers. The compensation may not be reduced by the manufacturer for any reason or made conditional on an activity outside the performance of warranty work.
WEST VIRGINIA – Each manufacturer shall provide each of its dealers with a schedule of compensation to be paid to the dealer for any warranty work or service, including parts, labor, and diagnostic work, required of the dealer by the manufacturer in connection with the manufacturer’s products, and for work on and preparation of motorsports vehicles received from the manufacturer. The compensation may not be less than the rates reasonably charged by the dealer for like services and parts to retail customers. The compensation may not be reduced by the manufacturer for any reason or made conditional on an activity outside the performance of warranty work.
WISCONSIN – A manufacturer, importer, or distributor of motorcycles with respect to a dealer of the manufacturer’s, importer’s, or distributor’s motorcycles shall reasonably compensate any authorized dealer who performs work to rectify the manufacturer’s, importer’s, or distributor’s product or warranty defects or delivery and preparation obligations or who performs any other work required, requested, or approved by the manufacturer, importer, or distributor or for which the manufacturer, importer, or distributor has agreed to pay, including compensation for labor at a labor rate equal to the effective labor rate charged all customers and for parts at an amount not less than the amount the dealer charges its other retail service customers for parts used in performing similar work by the dealer.
WYOMING – The hourly labor rate charged by the dealer for warranty service shall not exceed the hourly labor rate charged to non-warranty customers for non-warranty service and repairs, provided that rate is reasonable. Reimbursement for parts purchased by the dealer for use in performing work pursuant to a manufacturer’s express warranty shall be dealer cost plus 30 percent.