Relating to franchisee compensation and time allowances for motor vehicle warranty services, and including applicability provisions

The schedule of compensation must provide for the franchisee’s average percentage markup on parts, as calculated by the franchisee, and the franchisee’s retail labor rate, both of which must be approved by the franchiser. The franchiser must pay a franchisee for warranty parts and labor at least the franchisee’s retail rates for like parts and services, if those retail rates are reasonable. The franchiser is required to provide a list of reasonable and adequate time allowances for the performance of warranty services. This bill strikes the requirement for a franchiser to provide a schedule of compensation, and the related schedule provisions, and instead requires a franchiser to pay a franchisee for warranty services, including for parts, labor, and diagnostics, an amount not less than the rates and labor times charged by the franchisee for like parts and services to retail customers, provided the rates and labor times are reasonable. A franchisee is required to provide to the franchiser an itemized list of rates and labor times for warranty services performed by the franchisee. The bill also strikes the requirement for a franchiser to provide a list of time allowances for the performance of warranty services, and instead requires a franchisee to perform warranty services in a reasonable amount of time. The bill applies to franchises under Code chapter 322A entered into or renewed on or after July 1, 2026.