TEX OC. CODE ANN. § 2301.476 : Texas Statutes - Section 2301.476: MANUFACTURER OR DISTRIBUTOR OWNERSHIP, OPERATION, OR CONTROL OF DEALERSHIP

For expiration of Subsections (j), (k), (l), (m), (n), and (o), see Subsection (o).


(a) In this section, "manufacturer" includes:

(1) a representative; or

(2) a person who:

(A) is affiliated with a manufacturer or representative; or

(B) directly or indirectly through an intermediary, is controlled by, or is under common control with, a manufacturer.

(b) For purposes of Subsection (a)(2)(B), a person is controlled by a manufacturer if the manufacturer is directly or indirectly authorized, by law or by agreement of the parties, to direct or influence the person's management and policies.

(c) Except as provided by this section, a manufacturer or distributor may not directly or indirectly:

(1) own an interest in a dealer or dealership;

(2) operate or control a dealer or dealership; or

(3) act in the capacity of a dealer.

(d) A manufacturer or distributor may own an interest in a franchised dealer, or otherwise control a dealership, for a period not to exceed 12 months from the date the manufacturer or distributor acquires the dealership if:

(1) the person from whom the manufacturer or distributor acquired the dealership was a franchised dealer; and

(2) the dealership is for sale by the manufacturer or distributor at a reasonable price and on reasonable terms and conditions.

(e) On a showing of good cause by a manufacturer or distributor, the board may extend the time limit imposed under Subsection (d) for a period not to exceed an additional 12 months. An application for an extension after the first extension is granted is subject to protest by a dealer of the same line-make whose dealership is located in the same county as, or within 15 miles of, the dealership owned or controlled by the manufacturer or distributor.

(f) For the purpose of determining compliance with Subsection (d)(2), the price of a dealership and the other terms and conditions of a contract for the sale of a dealership are reasonable if the purchaser is a franchised dealer who:

(1) has made a significant investment in the dealership, subject to loss;

(2) has an ownership interest in the dealership; and

(3) operates the dealership under a plan to acquire full ownership of the dealership within a reasonable time and under reasonable terms and conditions.

(g) For the purpose of broadening the diversity of its dealer body and enhancing opportunities for qualified persons who are part of a group that has been historically underrepresented in its dealer body, or other qualified persons who lack the resources to purchase a dealership outright, but for no other purpose, a manufacturer or distributor may temporarily own an interest in a dealership if the manufacturer's or distributor's participation in the dealership is in a bona fide relationship with a franchised dealer who:

(1) has made a significant investment in the dealership, subject to loss;

(2) has an ownership interest in the dealership; and

(3) operates the dealership under a plan to acquire full ownership of the dealership within a reasonable time and under reasonable terms.

(h) A person who on June 7, 1995, held both a motor home manufacturer's license and a motor home dealer's license issued under this chapter may:

(1) continue to hold both licenses; and

(2) operate as both a manufacturer and dealer of motor homes but of no other type of vehicle.

(i) Notwithstanding the terms of this chapter, and subject to the limitations set forth in this subsection, a manufacturer or distributor may own an interest in an entity that holds a general distinguishing number if the entity:

(1) is primarily engaged in the business of renting to other persons passenger vehicles or commercial motor vehicles that the entity owns; and

(2) sells or offers for sale no vehicle other than a vehicle that the entity:

(A) owns and has taken from service in its rental fleet; or

(B) has taken in trade as part of a transaction involving the sale of a vehicle taken from service in its rental fleet.

(j) This section does not prohibit a manufacturer or distributor that owned, on or before January 1, 2007, an interest in a motor vehicle dealer engaged in the sale of used motor vehicles, and that has not agreed to or been ordered by a court order or ruling to comply with Subsection (c), from continuing to directly or indirectly own an interest in the motor vehicle dealer if the manufacturer's or distributor's ownership and control of the motor vehicle dealer does not increase after January 1, 2007. The exception provided by this subsection:

(1) applies if the motor vehicle dealer is engaged in the business of selling or offering for sale only used trucks that have a gross vehicle weight rating of 16,000 pounds or more;

(2) does not apply if the motor vehicle dealer sells a new motor vehicle;

(3) does not permit an increase in the manufacturer's or distributor's ownership interest in the motor vehicle dealer;

(4) does not grant an exception to this chapter other than the exception expressly provided by this subsection;

(5) applies regardless of whether there is a transfer or relocation of the motor vehicle dealer required by:

(A) an act of God;

(B) the exercise of eminent domain authority; or

(C) another reason approved by the division after a hearing conducted in the same manner as a contested case under Subchapter O; and

(6) does not apply if the manufacturer or distributor no longer owns the interest in the motor vehicle dealer that the manufacturer or distributor owned on or before January 1, 2007.

(k) A motor vehicle dealer under Subsection (j) violates that subsection if the dealer:

(1) sells or offers for sale a motor vehicle with a gross vehicle weight rating of less than 16,000 pounds, other than a motor vehicle the dealer has acquired as a trade-in in a transaction involving the retail sale of a motor vehicle with a gross vehicle weight rating of 16,000 pounds or more and if the trade-in motor vehicle will be sold or offered for sale only to a person who holds a general distinguishing number issued in the category described by Section 503.029(a)(6)(C), Transportation Code;

(2) performs or offers to perform new motor vehicle warranty repair; or

(3) sells or offers for sale a new motor vehicle.

(l) A manufacturer or distributor described by Subsection (j) violates that subsection if the manufacturer or distributor:

(1) sells, assigns, or otherwise transfers an interest in the motor vehicle dealer or a portion of its interest in the motor vehicle dealer to an unaffiliated manufacturer or distributor; or

(2) increases its ownership interest in the motor vehicle dealer.

(m) A person who violates Subsection (j), (k), or (l) is subject to:

(1) a civil penalty under Section 2301.801;

(2) a suit for injunctive relief under Section 2301.804; and

(3) denial, revocation, or suspension of a license under Section 2301.651.

(n) For purposes of Subsections (j), (k), and (l), a reference to a motor vehicle dealer includes the physical premises, business facilities, and operations where motor vehicle sales occur.

(o) This subsection, Subsections (j) through (n), and the exception provided by Subsection (j) expire September 1, 2023.


Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 503, Sec. 1, eff. June 20, 2003; Acts 2003, 78th Leg., ch. 1276, Sec. 14A.621(a), eff. Sept. 1, 2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. <a target="new" href="http://www.legis.state.tx.us/tlodocs/80R/billtext/html/HB00733F.HTM">105</a>, Sec. 1, eff. September 1, 2008.