Lawmakers in Maryland and Virginia passed bills this winter that are poised to have important impacts in the way franchise auto dealers run their businesses.
Virginia enacted a major modification to a dealer’s “right of first refusal,” which attorney Michael Charapp of Charapp & Weiss LLP said will help protect multi-franchise dealership groups by making it more difficult for manufacturers to destroy a deal for sale of a multi-franchise group as long as the buyer is a licensed dealer.
“This was our top priority in Virginia this cycle,” Charapp told a group of WANADA members in late April. “The ROFR modifications protect the value of what dealers spend their lives building.”
The Commonwealth also passed legislation protecting auto dealers if their manufacturer ceases building and distributing a line make. If the successor manufacturer does not honor dealer agreements, dealers have the right to payment for franchise assets, franchise goodwill value, and real estate assistance.
In Maryland, the General Assembly enacted a measure to raise the state’s minimum wage on a graded scale, with annual increases up to $15 by 2025. The state also doubled the value of a property tax credit that dealerships can use against their county and municipal bills. The new regulations would allow cities and counties to allow dealerships to now fully write off the portion of their real estate value that is reflected in the vehicles on their lot.
Beginning on October 1, Maryland auto dealers and repair facilities will no longer be able to use a buyer’s age as the sole basis for refusing to rent or loan a vehicle to a consumer, or to charge a higher fee for a rental vehicle. The state also expanded the plug-in electric vehicle excise tax credit, raising it to $3,000 beginning on July 1. The Democratic-led Assembly also pre-emptively prevented Governor Larry Hogan (R) from being able to unilaterally withdraw Maryland from regional greenhouse gas emissions programs, like the Regional Greenhouse Gas Initiative, without the authorization of the legislature.
On May 1, the Maryland House of Delegates selected Del. Adrienne Jones of Randallstown to be the new Speaker, replacing the late Michael Busch, who passed away on April 7. Prior to Del. Jones’ selection, attorney Michael Johansen of Rifkin Weiner Livingston LLC told WANADA dealers that Jones would likely be the most centrist of the three possible choices – the others being Del. Maggie McIntosh of Baltimore and Del. Dereck Davis of Mitchellville – and indeed Jones wound up being a compromise candidate of sorts, after the Democratic caucus was largely split between McIntosh and Davis.
“She is likely the most centrist of the options that we could hope for,” Johansen said of Jones. “But of course, any speaker will have to be responsive to their caucus.”
Looking towards 2020, Charapp expects Virginia’s assembly to debate a number of progressive bills, including a hike in their minimum wage that was defeated this year, given the strong possibility that both chambers of the General Assembly will flip to Democratic control following the upcoming election in November 2019. Republicans currently have a 51-49 advantage in the House of Delegates and hold a 21-19 majority in the Senate, but all 140 Assembly seats will be up for grabs this fall. If the election results play out as is widely expected, Virginia Democrats will enter 2020 with control of the General Assembly and all five statewide offices.
In Maryland, Democrats will once again have super-majority control of both chambers of the General Assembly in 2020, their 98th consecutive year with that level of veto-proof power. Maryland legislators in both the House and the Senate are elected to four-year terms, and they will not face the state’s voters again until November 2022.