Our association’s advocacy leads to comprehensive reforms, modernizing franchise law and reinforcing fairness for dealers across the state.
For dealers across North Carolina, running a franchise can feel like navigating a constantly shifting landscape. From ownership transitions to warranty obligations, inventory management and over-the-air vehicle subscriptions, the challenges are real and sometimes costly. Recognizing these pressures, NCADA took the lead in drafting legislation to modernize franchise protections and ensure dealers can operate on a level playing field.
The resulting law, passed last year, addresses nearly every aspect of the dealer-manufacturer relationship. It strengthens succession planning, clarifies ownership transfers, modernizes warranty reimbursement, protects against inventory risk and ensures fair compensation in a growing digital marketplace. Behind the legislation were months of NCADA-led advocacy, collaboration with manufacturers and careful work with lawmakers to produce reforms that address real-world dealer needs.
A central focus of the bill is fairness in ownership transitions. Applications for dealership transfers, sales, management changes or successor appointments must now be evaluated solely by their merits. Manufacturers may no longer consider whether another manufacturer previously denied an applicant, nor may they penalize applicants or their affiliates who have exercised their legal rights through civil or administrative actions. These safeguards protect dealers and successors from bias tied to unrelated past events and create a predictable framework for succession planning. In addition, if a manufacturer unreasonably denies a transfer and that denial is later overturned by a court or administrative agency, the manufacturer must reimburse both the dealer and the applicant for attorneys’ fees, discouraging arbitrary denials.
The legislation also ensures that dealers are not unfairly held to performance benchmarks when they lack the necessary tools to succeed. Manufacturers cannot terminate, cancel or refuse to renew a franchise for failing to meet sales or service standards unless they have provided a sufficient number and appropriate mix of vehicles to allow substantial progress. This shared responsibility reinforces fairness and protects dealers from penalties caused by inventory shortages or misaligned product allocation.
As vehicle technology evolves, NCADA secured protections to ensure dealers are fairly compensated for over-the-air and remotely activated products and services sold for a fee. Manufacturers must provide dealers with itemized compensation schedules and detailed reporting — covering up to six months — showing products sold to customers and commissions owed. These provisions maintain transparency, guarantee fair compensation and preserve the dealer’s role in customer relationships even as digital sales models expand.
The legislation also strengthens transparency in evaluating prospective owners and managers. Manufacturers objecting to a proposed executive management change or principal operator based on past performance must provide verifiable data spanning three years and cannot selectively use underperforming stores. Dealerships owned for less than two years cannot be counted in the assessment, ensuring fairness for qualified candidates.
NCADA’s work also clarifies core dealer functions. The law expands the definition of a motor vehicle dealer to include anyone performing warranty or recall work, reinforces that retail sales activities must occur through franchised dealers and prevents manufacturers from bypassing dealers through direct online sales or subscription models.
Additional protections allow dealers to designate successors upon retirement, safeguard them from absorbing unsellable or delayed inventory and provide stronger reimbursement standards for warranty, training and loaner vehicles. RV dealers who voluntarily surrender a franchise now receive termination assistance, with manufacturers required to repurchase motorized and non-motorized inventory, tools, signage and furnishings.
Taken together, these reforms reflect NCADA’s leadership in protecting dealers. They provide stronger safeguards, greater predictability and equitable treatment across operations, ensuring that franchise businesses can compete, serve customers and plan for the future with confidence in an evolving marketplace.
