Change of ownership of dealer — Family succession

  1. Law
  2. Arkansas Code
  3. Public Utilities and Regulated Industries
  4. Miscellaneous Regulated Industries
  5. Arkansas Motor Vehicle Commission Act
  6. Recreational Vehicle Franchise Act
  7. Change of ownership of dealer — Family succession

Checkout our iOS App for a better way to browser and research.

  1. (a) The following conditions apply to a proposed sale of the business assets, transfer of the stock, or other transaction that will result in a change of ownership of a dealer, except a transaction described in subsection (b) of this section:

    1. (1) The dealer shall:

      1. (A) Provide written notice to the manufacturer within sixty (60) days before the proposed closing of the transaction; and

      2. (B) Include all supporting documentation as may be reasonably required by the manufacturer or distributor to determine if an objection to the sale may be made;

    2. (2) In the absence of a breach by the selling dealer of its dealer agreement or a failure to comply with subdivision (a)(1) of this section, the manufacturer or distributor shall not object to the proposed change in ownership unless the prospective transferee meets one (1) or more of the following:

      1. (A) The prospective transferee has previously been terminated by the manufacturer for breach of its dealer agreement;

      2. (B) The prospective transferee has been convicted of a felony or any crime of fraud, deceit, or moral turpitude in the preceding ten (10) years;

      3. (C) The prospective transferee does not have:

        1. (i) An application for a recreational vehicle dealer's license pending; or

        2. (ii) A tentative dealer agreement with a recreational vehicle manufacturer to conduct business as a dealer in this state;

      4. (D) The prospective transferee does not have an active line of credit sufficient to purchase a manufacturer's product; or

      5. (E) In the preceding ten (10) years the prospective transferee has undergone:

        1. (i) Bankruptcy;

        2. (ii) Insolvency;

        3. (iii) A general assignment for the benefit of creditors; or

        4. (iv) The appointment of a receiver, trustee, or conservator to take possession of the transferee's business or property; and

    3. (3)

      1. (A) If the manufacturer or distributor objects to a proposed change of ownership, the manufacturer or distributor shall give written notice of its reasons to the dealer within fifteen (15) business days after receipt of the dealer's notification and complete documentation.

      2. (B) If the manufacturer or distributor does not give timely notice of its objection, the change or sale shall be deemed approved.

      3. (C) The manufacturer or distributor has the burden of proof when objecting to the proposed change of ownership.

  2. (b) The following conditions apply concerning the death, incapacity, or retirement of the designated dealer principal:

    1. (1) It is unlawful for a manufacturer or distributor:

      1. (A) To fail to provide a dealer an opportunity to designate in writing a family member as a successor to the dealership; and

      2. (B) To prevent or refuse to honor the succession to a dealership by a family member unless the manufacturer or distributor has provided to the dealer written notice of its objections within thirty (30) days after receipt of the dealer's modification of the dealer's succession plan;

    2. (2) In the absence of a breach of the dealer agreement, the manufacturer or distributor may object to the succession for the following reasons:

      1. (A) Conviction of the successor of a felony or any crime of fraud, deceit, or moral turpitude in the preceding ten (10) years;

      2. (B) Bankruptcy or insolvency of the successor in the preceding ten (10) years;

      3. (C) Prior termination by the manufacturer or distributor of the successor for breach of a dealer agreement;

      4. (D) The lack of an active line of credit for the successor sufficient to purchase the manufacturer's product; or

      5. (E) The lack of:

        1. (i) A pending application for a recreational vehicle dealer's license; or

        2. (ii) A tentative dealer agreement with a recreational vehicle manufacturer to conduct business as a dealer in this state;

    3. (3) The manufacturer or distributor has the burden of proof regarding its objection to the succession to a dealership by a family member; and

    4. (4) The consent of the manufacturer or distributor is required for the succession to a dealership by a family member if the succession involves a relocation of the business or an alteration of the terms and conditions of the dealer agreement.

  3. (c) The dealer shall notify the Arkansas Motor Vehicle Commission of any change in ownership in accordance with § 23-112-1019.


Download our app to see the most-to-date content.