C.R.S. Section 44-20-124
Unlawful acts


(1)

It is unlawful and a violation of this part 1 for any manufacturer, distributor, or manufacturer representative:

(a)

To willfully fail to perform or cause to be performed any written warranties made with respect to any motor vehicle or parts thereof;

(b)

To coerce or attempt to coerce any motor vehicle dealer to perform or allow to be performed any act that could be financially detrimental to the dealer or that would impair the dealer’s goodwill or to enter into any agreement with a manufacturer or distributor that would be financially detrimental to the dealer or impair the dealer’s goodwill, by threatening to cancel or not renew any franchise between a manufacturer or distributor and the dealer;

(c)

To coerce or attempt to coerce any motor vehicle dealer to accept delivery of any motor vehicle, parts or accessories therefor, or any commodities or services that have not been ordered by the dealer;

(d)

Intentionally left blank —Ed.

(I)

To cancel or cause to be canceled, directly or indirectly, without just cause, the franchise of any motor vehicle dealer, and the nonrenewal of a franchise or selling agreement without just cause is a violation of this subsection (1)(d) and shall constitute an unfair cancellation.

(II)

As used in this subsection (1)(d), “just cause” shall be determined in the context of all circumstances surrounding the cancellation or nonrenewal, including but not limited to:

(A)

The amount of business transacted by the motor vehicle dealer;

(B)

The investments necessarily made and obligations incurred by the motor vehicle dealer, including but not limited to goodwill, in the performance of its duties under the franchise agreement, together with the duration and permanency of the investments and obligations;

(C)

The potential for harm to consumers as a result of disruption of the business of the motor vehicle dealer;

(D)

The motor vehicle dealer’s failure to provide adequate service of facilities, equipment, parts, and qualified service personnel;

(E)

The motor vehicle dealer’s failure to perform warranty work on behalf of the manufacturer, subject to reimbursement by the manufacturer; and

(F)

The motor vehicle dealer’s failure to substantially comply, in good faith, with requirements of the franchise that are determined to be reasonable and material.

(III)

The following conduct by a motor vehicle dealer shall constitute just cause for termination without consideration of other factors:

(A)

Conviction of, or a plea of guilty or nolo contendere to, a felony;

(B)

A continuing pattern of fraudulent conduct against the manufacturer or consumers; or

(C)

Continuing failure to operate for ten days or longer.

(e)

To withhold, reduce, or delay unreasonably or without just cause delivery of motor vehicles, motor vehicle parts and accessories, commodities, or money due motor vehicle dealers for warranty work done by any motor vehicle dealer;

(f)

To withhold, reduce, or delay unreasonably or without just cause services contracted for by motor vehicle dealers;

(g)

To coerce any motor vehicle dealer to provide installment financing with a specified financial institution;

(h)

To violate any duty imposed by, or fail to comply with, any provision of section 44-20-125, 44-20-126, or 44-20-127;
(i)
Intentionally left blank —Ed.

(I)

To fail to provide to the motor vehicle dealer, within twenty days after receipt of a notice of intent from a motor vehicle dealer, the list of documents and information necessary to approve the sale or transfer of the ownership of a dealership by sale of the business or by stock transfer or the change in executive management of the dealership;

(II)

To fail to confirm within twenty days after receipt of all documents and information listed in subsection (1)(i)(I) of this section that the documentation and information has been received;

(III)

To refuse to approve, unreasonably, the sale or transfer of the ownership of a dealership by sale of the business or by stock transfer within sixty days after the manufacturer has received all documents and information necessary to approve the sale or transfer of ownership, or to refuse to approve, unreasonably, the change in executive management of the dealership within sixty days after the manufacturer has received all information necessary to approve the change in management; except that nothing in this part 1 shall authorize the sale, transfer, or assignment of a franchise or a change of the principal operator without the approval of the manufacturer or distributor unless the manufacturer or distributor fails to send notice of the disapproval within sixty days after receiving all documents and information necessary to approve the sale or transfer of ownership; or

(IV)

To condition the sale, transfer, relocation, or renewal of a franchise agreement, or to condition sales, services, parts, or finance incentives, upon site control or an agreement to renovate or make improvements to a facility; except that voluntary acceptance of the conditions by the dealer shall not constitute a violation;
(j)(I)(A) To fail or refuse to offer to its same line-make franchised dealers all models manufactured for that line-make except as a result of a strike or labor difficulty, lack of manufacturing capacity, shortage of materials, freight embargo, or other cause over which the manufacturer has no control; or

(B)

To require a dealer to pay an unreasonable fee, purchase unreasonable advertising displays or other materials, or comply with unreasonable training or facilities requirements as a prerequisite to receiving any particular model of that same line-make. For purposes of this subsection (1)(j)(I)(B), reasonableness shall be judged based on the circumstances of the individual dealer and the conditions of the market served by the dealer.

(II)

This subsection (1)(j) shall not apply to manufacturers of recreational vehicles nor to manufacturers of vehicles with a passenger capacity of thirty-two or more.

(k)

To require, coerce, or attempt to coerce any motor vehicle dealer to refrain from participation in the management of, investment in, or acquisition of any other line-make of new motor vehicles or related products; except that this subsection (1)(k) shall not apply unless the motor vehicle dealer:

(I)

Maintains a reasonable line of credit for each make or line of new motor vehicles;

(II)

Remains in compliance with reasonable capital standards and reasonable facilities requirements specified by the manufacturer; except that “reasonable facilities requirements” shall not include a requirement that a motor vehicle dealer establish or maintain exclusive facilities, personnel, or display space; and

(III)

Provides written notice to the manufacturer, distributor, or manufacturer’s representative, no less than ninety days prior to the dealer’s intent to participate in the management of, investment in, or acquisition of another line-make of new motor vehicles or related products;

(l)

Intentionally left blank —Ed.

(I)

To fail to pay to a motor vehicle dealer, within ninety days after the termination, cancellation, or nonrenewal of a franchise, all of the following:

(A)

The dealer cost, plus any charges made by the manufacturer for distribution, delivery, and taxes, less all allowances paid or credited to the motor vehicle dealer by the manufacturer, of unused, undamaged, and unsold motor vehicles in the motor vehicle dealer’s inventory that were acquired from the manufacturer or from another motor vehicle dealer of the same line-make in the ordinary course of business within the previous twelve months;

(B)

The dealer cost, less all allowances paid or credited to the motor vehicle dealer by the manufacturer, for all unused, undamaged, and unsold supplies, parts, and accessories in original packaging and listed in the manufacturer’s current parts catalog;

(C)

The fair market value of each undamaged sign owned by the motor vehicle dealer and bearing a common name, trade name, or trademark of the manufacturer if acquisition of the sign was required by the manufacturer;

(D)

The fair market value of all special tools and equipment that were acquired from the manufacturer or from sources approved and required by the manufacturer and that are in good and usable condition, excluding normal wear and tear; and

(E)

The cost of transporting, handling, packing, and loading the motor vehicles, supplies, parts, accessories, signs, special tools, equipment, and furnishings described in this subsection (1)(l).

(II)

This subsection (1)(l) shall only apply to manufacturers of recreational vehicles in cases where the manufacturer terminates, cancels, or fails to renew the recreational vehicle dealer franchise; and this subsection (1)(l) shall not apply to manufacturers of vehicles with a passenger capacity of thirty-two or more.

(m)

To require, coerce, or attempt to coerce any motor vehicle dealer to close or change the location of the motor vehicle dealer, or to make any substantial alterations to the dealer premises or facilities when doing so would be unreasonable or without written assurance of a sufficient supply of motor vehicles so as to justify the changes, in light of the current market and economic conditions;

(n)

Intentionally left blank —Ed.

(I)

To authorize or permit a person to perform warranty service repairs on motor vehicles unless the person is:

(A)

A motor vehicle dealer with whom the manufacturer has entered into a franchise agreement for the sale and service of the manufacturer’s motor vehicles; or

(B)

A person or government entity that has purchased new motor vehicles pursuant to a manufacturer’s fleet discount program and is performing the warranty service repairs only on vehicles owned by the person or entity.

(II)

This subsection (1)(n) shall not apply to manufacturers of recreational vehicles nor to manufacturers of vehicles with a passenger capacity of thirty-two or more.

(o)

To require, coerce, or attempt to coerce any motor vehicle dealer to prospectively agree to a release, assignment, novation, waiver, or estoppel that would relieve any person of a duty or liability imposed under this article 20 except in settlement of a bona fide dispute;

(p)

To discriminate between or refuse to offer to its same line-make franchised dealers all models manufactured for that line-make based upon unreasonable sales and service standards;

(q)

To fail to make practically available any incentive, rebate, bonus, or other similar benefit to a motor vehicle dealer that is offered to another motor vehicle dealer of the same line-make within this state;

(r)

To fail to pay to a motor vehicle dealer:

(I)

Within ninety days after the termination, cancellation, or nonrenewal of a franchise for the failure of a dealer to meet performance sales and service obligations or after the termination, elimination, or cessation of a line-make, the cost of the lease for the facilities used for the franchise or line-make for the unexpired term of the lease, not to exceed one year; except that:

(A)

If the motor vehicle dealer owns the facilities, the value of renting the facilities for one year, prorated for each line-make based upon total sales volume for the previous twelve months before the involuntary termination;

(B)

If the dealer sells recreational vehicles and a subsequent manufacturer or distributor that manufactures or distributes recreational vehicles replaces any portion of the vacated facilities, the lease or rental value shall be prorated on a monthly basis unless the dealer sells motor vehicles that are not recreational vehicles;

(C)

Nothing in this subsection (1)(r)(I) shall be construed to limit the application of subsection (1)(d) of this section;

(II)

Within ninety days after the termination, elimination, or cessation of a line-make or the termination of a franchise due to the insolvency of the manufacturer or distributor, the fair market value of the motor vehicle dealer’s goodwill for the line-make as of the date the manufacturer or distributor announces the action that results in the termination, elimination, or cessation, not including any amounts paid under subsections (1)(l)(I)(A) to (1)(l)(I)(E) of this section;

(s)

To condition a franchise agreement on improvements to a facility unless reasonably required by the technology of a motor vehicle being sold at the facility;

(t)

To sell or offer for sale a low-speed electric vehicle, as defined by section 42-1-102, for use on a roadway unless the vehicle complies with part 2 of article 4 of title 42;

(u)

To charge back, deny motor vehicle allocation, withhold payments, or take other actions against a motor vehicle dealer if a motor vehicle sold by the motor vehicle dealer is exported from Colorado unless the manufacturer, distributor, or manufacturer representative proves that the motor vehicle dealer knew or reasonably should have known a motor vehicle was intended to be exported, which shall operate as a rebuttable presumption that the motor vehicle dealer did not have the knowledge;
(v)
Within ninety days after the termination, elimination, or cessation of a line-make or the termination, cancellation, or nonrenewal of a franchise by the manufacturer, distributor, or manufacturer representative, for any reason other than that the motor vehicle dealer commits fraud, makes a misrepresentation, or commits any other crime within the scope of the franchise agreement or in the operation of the dealership, to fail to reimburse a motor vehicle dealer for the cost depreciated by five percent per year of any upgrades or alterations to the motor vehicle dealer’s facilities required by the manufacturer, distributor, or manufacturer representative within the previous five years;

(w)

To fail to notify a motor vehicle dealer at least ninety days before the following and to provide the specific reasons for the following:

(I)

Directly or indirectly terminating, canceling, or not renewing a franchise agreement; or

(II)

Modifying, replacing, or attempting to modify or replace the franchise or selling agreement of a motor vehicle dealer, including a change in the dealer’s geographic area upon which sales or service performance is measured, if the modification would substantially and adversely alter the rights or obligations of the dealer under the current franchise or selling agreement or would substantially impair the sales or service obligations or the dealer’s investment;
(x)
To require, coerce, or attempt to coerce a motor vehicle dealer to substantially alter a facility or premises if:

(I)

The facility or premises has been altered within the last ten years at a cost of more than two hundred fifty thousand dollars and the alteration was required and approved by the manufacturer, distributor, or manufacturer representative unless subsection (1)(x)(II) of this section applies to the dealer; except that this subsection (1)(x) does not apply to improvements made to comply with health or safety laws, to improvements made to accommodate the technology requirements necessary to sell or service a line-make, to technological improvements related to electric, automated, compressed natural gas, and fuel-cell motor vehicles, or to improvements made to install or upgrade electric vehicle charging equipment; or

(II)

Intentionally left blank —Ed.

(A)

Except as provided in subsection (1)(x)(II)(B) of this section, the motor vehicle dealer: Sells only motorcycles, autocycles, motorcycles and autocycles, or motorcycles, autocycles, and powersports vehicles; the facility or premises has been altered within the last ten years at a cost of more than twenty-five thousand dollars; and the alteration was required and approved by the manufacturer, distributor, or manufacturer representative.

(B)

This subsection (1)(x)(II) does not apply to improvements made to comply with health or safety laws; to improvements made to accommodate the technology requirements necessary to sell or service a line-make; to technological improvements related to electric, automated, compressed natural gas, and fuel-cell motorcycles and powersports vehicles; or to improvements made to install or upgrade electric vehicle charging equipment.

(y)

Intentionally left blank —Ed.

(I)

To sell or offer to sell new motor vehicles to a franchised motor vehicle dealer with whom the manufacturer has a franchise agreement at a lower actual price than the actual price offered to any other motor vehicle dealer with whom the manufacturer has a franchise agreement for the same motor vehicle similarly equipped; except that this subsection (1)(y) does not apply to:

(A)

Resale to any government;

(B)

Donation or use by the dealer in a driver education program; or

(C)

A price change made in the ordinary course of business if made available to all motor vehicle dealers when the price changes.

(II)

This subsection (1)(y) does not prohibit a manufacturer, distributor, or manufacturer representative from offering incentive programs, sales-promotion plans, or other discounts if the incentives or discounts are reasonably available to all motor vehicle dealers with whom the manufacturer has a franchise agreement.

(z)

To require a motor vehicle dealer to grant a manufacturer, distributor, or manufacturer representative the following or to enforce the following if the exercise of the contractual right would stop the transfer of the motor vehicle dealer ownership from an owner to an immediate family member of the owner:

(I)

A right of first refusal to purchase the motor vehicle dealer; or

(II)

An option to purchase the motor vehicle dealer; and

(aa)

Intentionally left blank —Ed.

(I)

To use an unreasonable, arbitrary, or unfair performance standard in determining a motor vehicle dealer’s compliance with a franchise agreement;

(II)

To fail to communicate, upon the request of the dealer, any performance standard in a clear and concise writing to a motor vehicle dealer before applying the standard to the motor vehicle dealer.

(2)

It is unlawful for any person to act as a motor vehicle dealer, manufacturer, distributor, wholesaler, manufacturer representative, used motor vehicle dealer, buyer agent, wholesale motor vehicle auction dealer, business disposer, or motor vehicle salesperson unless the person has been duly licensed under this part 1, except for:

(a)

Persons exempt from licensure as a manufacturer under section 44-20-102 (14); however, manufacturers exempt from licensing shall comply with all other applicable requirements for manufacturers, including those pertaining to vehicle identification numbers and manufacturers’ statements of origin; and

(b)

Business owners selling a vehicle if the vehicle has been owned for more than one year, the vehicle has been used exclusively for business purposes, the vehicle is titled in the name of the business, all applicable taxes related to the vehicle have been paid, and the total number of vehicles sold by a business owner over a two-year period does not exceed twenty vehicles.

(3)

It is unlawful and a violation of this part 1 for a buyer’s agent to engage in the following:

(a)

To make a material misstatement in an application for a license;

(b)

To willfully fail to perform or cause to be performed any written agreement with respect to any motor vehicle or parts thereof;

(c)

To defraud any buyer, seller, motor vehicle salesperson, or financial institution;

(d)

To intentionally enter into a financial agreement with a seller of a motor vehicle for the buyer agent’s own benefit;

(e)

To coerce any motor vehicle dealer into providing installment financing with a specified financial institution.

Source: Section 44-20-124 — Unlawful acts, https://leg.­colorado.­gov/sites/default/files/images/olls/crs2023-title-44.­pdf (accessed Oct. 20, 2023).

44‑20‑101
Legislative declaration
44‑20‑102
Definitions
44‑20‑103
Motor vehicle dealer board - creation
44‑20‑104
Board - oath - meetings - powers and duties - rules
44‑20‑105
Auto industry division - creation - powers and duties of executive director and director
44‑20‑106
Records as evidence
44‑20‑107
Attorney general to advise and represent
44‑20‑108
Classes of licenses
44‑20‑109
Temporary motor vehicle dealer license
44‑20‑110
Display, form, custody, and use of licenses
44‑20‑111
Fees - disposition - expenses - expiration of licenses
44‑20‑112
Bond of licensee
44‑20‑113
Motor vehicle salesperson’s bond
44‑20‑114
Buyer agent bonds
44‑20‑115
Notice of claims honored against bond
44‑20‑116
Testing licensees
44‑20‑117
Filing of written warranties
44‑20‑118
Application - prelicensing education - fingerprint-based criminal history record check - rules
44‑20‑119
Notice of change of address or status
44‑20‑120
Principal place of business - requirements
44‑20‑121
Licenses - grounds for denial, suspension, or revocation
44‑20‑122
Procedure for denial, suspension, or revocation of license - judicial review
44‑20‑123
Sales activity following license denial, suspension, or revocation - unlawful act - penalty
44‑20‑124
Unlawful acts
44‑20‑125
New, reopened, or relocated dealer - notice required - grounds for refusal of dealer license - definitions - rules
44‑20‑126
Independent control of dealer - definitions
44‑20‑127
Successor under existing franchise agreement - duties of manufacturer
44‑20‑128
Penalty
44‑20‑129
Fines - disposition - unlicensed sales
44‑20‑130
Drafts not honored for payment - penalties
44‑20‑131
Right of action for loss
44‑20‑132
Contract disputes - venue - choice of law
44‑20‑133
Disposition of fees - auto dealers license fund - created
44‑20‑134
Advertisement - inclusion of dealer name
44‑20‑135
Audit reimbursement limitations - dealer claims
44‑20‑136
Reimbursement for right of first refusal
44‑20‑137
Payout exemption to execution
44‑20‑138
Site control extinguishes
44‑20‑139
Modification voidable
44‑20‑140
Termination appeal
44‑20‑141
Stop-sale directives - used motor vehicles - definitions
44‑20‑141.5
Fulfillment and compensation for warranty and recall obligations - definitions
44‑20‑141.6
Fulfillment of warranty and recall obligations - recreational vehicles - definitions
44‑20‑142
Repeal of part
44‑20‑201
Definitions
44‑20‑202
Exclusive finance agreements void - when
44‑20‑203
Threat prima facie evidence of violation
44‑20‑204
Threat by agent as evidence of violation
44‑20‑205
Offering consideration to eliminate competition
44‑20‑206
Accepting consideration to eliminate competition
44‑20‑207
Recipient of consideration shall not buy mortgages
44‑20‑208
Quo warranto action
44‑20‑209
Violation by foreign corporation - penalty
44‑20‑210
Penalty
44‑20‑211
Contract void
44‑20‑212
Provisions cumulative
44‑20‑213
Damages
44‑20‑214
Repeal of part
44‑20‑301
Definitions
44‑20‑302
Sunday closing
44‑20‑303
Penalties
44‑20‑304
Repeal of part
44‑20‑401
Legislative declaration
44‑20‑402
Definitions
44‑20‑403
Motor vehicle dealer board
44‑20‑404
Board - powers and duties - rules
44‑20‑405
Powers and duties of executive director and director
44‑20‑406
Records as evidence
44‑20‑407
Attorney general to advise and represent
44‑20‑408
Classes of licenses
44‑20‑409
Temporary powersports vehicle dealer license
44‑20‑410
Display, form, custody, and use of licenses
44‑20‑411
Fees - disposition - expenses - expiration of licenses
44‑20‑412
Bond of licensee
44‑20‑413
Powersports vehicle salesperson’s bond
44‑20‑414
Notice of claims honored against bond
44‑20‑415
Testing licensees
44‑20‑416
Filing of written warranties
44‑20‑417
Application - fingerprint-based criminal history record check - rules
44‑20‑418
Notice of change of address or status
44‑20‑419
Principal place of business - requirements - exceptions
44‑20‑420
Licenses - grounds for denial, suspension, or revocation
44‑20‑421
Procedure for denial, suspension, or revocation of license - judicial review
44‑20‑422
Sales activity following license denial, suspension, or revocation - unlawful act - penalty
44‑20‑423
Unlawful acts
44‑20‑424
New, reopened, or relocated dealer - notice required - grounds for refusal of dealer license - definitions - rules
44‑20‑425
Independent control of dealer - definitions
44‑20‑426
Successor under existing franchise agreement - duties of powersports vehicle manufacturer
44‑20‑427
Audit reimbursement limitations - dealer claims
44‑20‑428
Reimbursement for disapproving sale
44‑20‑429
Penalty
44‑20‑430
Fines - disposition - unlicensed sales
44‑20‑431
Drafts or checks not honored for payment - penalties
44‑20‑432
Right of action for loss
44‑20‑433
Contract disputes - venue - choice of law
44‑20‑434
Advertisement - inclusion of dealer name
44‑20‑435
Payout exemption to execution
44‑20‑436
Site control extinguishes
44‑20‑437
Modification voidable
44‑20‑438
Termination appeal
44‑20‑439
Stop-sale directives - used powersports vehicles - definitions
44‑20‑439.5
Fulfillment and compensation for warranty and recall obligations - definitions
44‑20‑440
Repeal of part
Green check means up to date. Up to date

Current through Fall 2024

§ 44-20-124’s source at colorado​.gov