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Direct Sales Laws

Discussion in 'Wiki' started by Wiki, Feb 27, 2016.

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The first post in this thread is a WikiPost, and can be edited by anyone with the appropriate permissions.
  1. Wiki

    Wiki Member

    Mar 21, 2016
    #1 Wiki, Feb 27, 2016
    Last edited by bhzmark: Apr 20, 2016
    STATEStatusStatutory textProposed Legislation Activity and other Notes
    TexasNo direct Sales"Except as provided by this section, a manufacturer or distributor may not directly or indirectly; (1) own an interest in a franchised or nonfranchised dealer or dealership;(2) operate or control a franchised or nonfranchised dealer or dealership; or (3) act in the capacity of a franchised or nonfranchised dealer. (Tex. Occ. Code Ann. § 2301.476)
    "A motor vehicle shall not be advertised for sale in any manner that creates the impression that it is being offered for sale by the manufacturer or distributor of the vehicle. An advertisement shall not contain terms such as “factory sale,” “fleet prices,” “wholesale prices,” “factory approved,” “factory sponsored,” “manufacturer sale,” use a manufacturer's name or abbreviation in any manner calculated or likely to create an impression that the vehicle is being offered for sale by the manufacturer or distributor, or use any other similar terms which indicate sales other than retail sales from the dealer" (43 Tex. Admin. Code § 215.261).

    MichiganNo direct SalesA manufacturer shall not do any of the following: . . . (h) Directly or indirectly own, operate, or control a new motor vehicle dealer, including, but not limited to, a new motor vehicle dealer engaged primarily in performing warranty repair services on motor vehicles under the manufacturer's warranty, or a used motor vehicle dealer. Mich. Comp. Laws Ann. § 445.1574 Michigan Car Dealers Slip One Over On Tesla, Ban Direct Sales: UPDATED.
    W. VirginiaNo direct sales(2) A manufacturer or distributor may not do any of the following:. . . (h) Establish a new motor vehicle dealership.
    (4) no manufacturer or franchisor may sell, directly or indirectly, any new motor vehicle to a consumer in this state, except through a new motor vehicle dealer holding a franchise for the line-make covering such new motor vehicle. W. Va. Code Ann. § 17A-6A-10

    New MexicoNo direct SalesIt is unlawful for a manufacturer, distributor or representative to:. . . V. be licensed as a dealer or perform warranty or other service or own an interest, directly or indirectly, in a person licensed as a dealer or performing warranty or other service; N.M. Stat. Ann. § 57-16-5

    S. Carolina
    [to come] [South Carolina allows dealers to hire an e-retailer to sell their products via the Internet. S.C. CODE ANN. § 56-15-85 (2014).

    SELLING STATES (per Tesla website)




    but ". . . no manufacturer or distributor shall: (16) Own, operate or control, either directly or indirectly, a facility for the performance of motor vehicle warranty service work." Conn. Gen. Stat. Ann. § 42-133cc






    [to come] IND. CODE ANN. §§ 9-32-11-2(c), 9-32-11-17; [Indiana only allows online sales so long as they occur within the state and are picked up from the dealer marketing online.] IND. CODE ANN. §§ 9-32-11-2(c), 9-32-11-17.







    New York

    N. Carolina

    recently rejected a dealer sponsored law change




    A franchisor may not in this state . . . (u) except as provided in Subsection (6), directly or indirectly: (i) own an interest in a new motor vehicle dealer or dealership; (ii) operate or control a new motor vehicle dealer or dealership; (iii) act in the capacity of a new motor vehicle dealer, as defined in Section 13-14-102; or (iv) operate a motor vehicle service facility; Utah Code Ann. § 13-14-201
    " It shall be unlawful for any motor vehicle manufacturer . . . to own, operate, or control any motor vehicle dealership in the Commonwealth. However, this section shall not prohibit:
    . . .
    4. The ownership, operation, or control of a dealership by a manufacturer, factory branch, distributor, distributor branch, or subsidiary thereof if the Commissioner determines, after a hearing at the request of any party, that there is no dealer independent of the manufacturer or distributor, factory branch or distributor branch, or subsidiary thereof available in the community or trade area to own and operate the franchise in a manner consistent with the public interest;" § 46.2-1572. Operation of dealership by manufacturer
    "It shall be unlawful for any motor vehicle manufacturer . . . to own, operate, or control, either directly or indirectly, any motor vehicle warranty or service facility located in the Commonwealth." § 46.2-1572.1. Ownership of service facilities
    § 46.2-1573. Hearings and other remedies; civil penalties (allowing for discovery by the parties at the hearing) Virginia Dealer Association suing Tesla to prevent new store openings Tesla seeking to open Richmond facility Virginia Hearing, 4/25 -- Represent!


  2. bhzmark

    bhzmark Active Member

    Jul 21, 2013
  3. LastGas

    LastGas Member

    Aug 13, 2016
    South Carolina
    Text for South Carolina from Section 56-15-45:

    (A) It is unlawful for a manufacturer or franchisor or any parent, affiliate, wholly or partially owned subsidiary, officer, or representative of a manufacturer or franchisor to own, operate, or control or to participate in the ownership, operation, or control of a new motor vehicle dealer in this State, to establish in this State an additional dealer or dealership in which that person or entity has an interest, or to own, operate, or control, directly or indirectly, an interest in a dealer or dealership in this State, excluding a passive interest in a publicly traded corporation held for investment purposes.​

    Code of Laws - Title 56 - Chapter 15 - Regulation Of Manufacturers, Distributors And Dealers
  4. Texas

    Texas Member

    May 19, 2015
    Houston, Texas
    State legislatures are no longer Tesla's prime venue for overcoming legal barriers to direct sales. With Tesla’s September 2016 federal lawsuit filing against the state of Michigan, the real action has shifted to the courts. The petition can be read at This is a constitutional frontal attack on Michigan’s anti-Tesla statute. The grounds are violation of the Due Process, Equal Protection, and Commerce Clauses of the Constitution. This is an ideal test case because the anti-Tesla statute is blatantly anti-competitive and because it was passed through parliamentary legerdemain on the last day of a Michigan legislative session—before the opposition even knew an anti-Tesla amendment was being insinuated into existing state law.

    The constitutional head-on challenge represents a very smart strategy. The theoretical details are laid out in an article by Daniel A. Crane, Tesla, Dealer Franchise Laws, and the Politics of Crony Capitalism, 101 Iowa L. Rev. 573 (2016). This outstanding piece is available online at The author takes up all of the arguments made by the car dealers and calmly eviscerates each one in turn. This article is a pleasure to read, just to see how a methodical analyst guts and minces the flabby claims of the car dealer lobby.

    The circumstances by which the anti-Tesla amendment was passed were highly suggestive of a pure attempt to deprive a competitor of access to the marketplace, and to exclude an out of state competitor from bringing its products across state lines into Michigan—in violation of the Commerce Clause.

    In addition to the constitutional issues, there is a subliminal issue running through all of this. Everyone in the legal system—judges, lawyers, and clients—have experienced the “consumer protection” features of franchised car dealers when buying new cars and dealing with dealer service departments. Nobody believes that dealer franchise laws do anything other than protect the profits of incumbent auto dealers. By continuing to allow car dealers to arbitrarily exclude innovators like Tesla from the market, the federal courts would--to use a centuries-old phrase in law--"be making an ass of the law." In other words, crazy rules don’t last forever in the courts.

    I think the day is coming when the lawyer members of Tesla Motors Club are able to submit thoughtful "friend of the court" briefs in support of Tesla’s case. I look forward to it.

    Incidentally, there is no Texas pro-Tesla bill in the current session, at least according to Texas Legislature Online, This really tells me that Tesla is putting its chips on the Michigan case.
    (I'm going to paste this comment into other threads because people need to be aware of Tesla's strategy)
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