Colorado § 44-20-126 - Independent control of dealer - definitions.

§ 44-20-126. Independent control of dealer - definitions.

(1) Except as otherwise provided in this section, no manufacturer shall own, operate, or control any motor vehicle dealer or used motor vehicle dealer in Colorado.

(2) Notwithstanding subsection (1) of this section, the following activities are not prohibited:

(a) (I) Except as provided in subsection (2)(a)(II) of this section, operation of a dealer for a temporary period, not to exceed twelve months, during the transition from one owner or operator to another independent owner or operator; except that the executive director may extend the period, not to exceed twenty-four months, upon showing by the manufacturer or distributor of the need to operate the dealership for such time to achieve a transition from an owner or operator to another independent third-party owner or operator;

(II) Operation of a dealer that sells recreational vehicles for not more than eighteen months during the transition from one owner or operator to another independent owner or operator;

(b) Ownership or control of a dealer while the dealer is being sold under a bona fide contract or purchase option to the operator of the dealer;

(c) Participation in the ownership of the dealer solely for the purpose of providing financing or a capital loan that will enable the dealer to become the majority owner of the dealer in less than seven years;

(d) Operation of a motor vehicle dealer if the manufacturer has no other dealers of the same line-make in this state; or

(e) and (f) Repealed.

(g) Ownership, operation, or control of one or more motor vehicle dealers if the manufacturer manufactures only electric vehicles and has no franchised dealers of the same line-make in this state.

(3) As used in this section:

(a) "Control" means to possess, directly, the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract, or otherwise; except that "control" does not include the relationship between a manufacturer and a motor vehicle dealer under a franchise agreement.

(b) "Manufacturer" means a motor vehicle manufacturer, distributor, or manufacturer representative.

(c) "Operate" means to directly or indirectly manage a motor vehicle dealer.

(d) "Own" means to hold any beneficial ownership interest of one percent or more of any class of equity interest in a dealer, whether as a shareholder, partner, limited liability company member, or otherwise. To "hold" an ownership interest means to have possession of, title to, or control of the ownership interest, either directly or through a fiduciary or agent.

(4) This section shall not apply to manufacturers of vehicles with a passenger capacity of thirty-two or more.

Source: L. 2018: Entire article added with relocations, (SB 18-030), ch. 7, p. 82, § 2, effective October 1. L. 2020: (2)(d) amended, (2)(e) and (2)(f) repealed, and (2)(g) added, (SB 20-167), ch. 71, p. 302, § 1, effective September 14.

Editor's note: This section is similar to former § 12-6-120.5 as it existed prior to 2018.

ANNOTATION

Annotator's note. Since § 44-20-126 is similar to § 12-6-120.5 as it existed prior to its 2018 relocation to this section, a relevant case construing that provision has been included in the annotations to this section.

Subsection (1) does not prohibit a motor vehicle manufacturer from owning, operating, or controlling a used motor vehicle dealer. Int'l Truck & Engine Corp. v. Colo. Dept. of Rev., 155 P.3d 640 (Colo. App. 2007).

Use of the word "any" before the term motor vehicle dealer does not expand the definition of that term to include a "used motor vehicle dealer". Int'l Truck & Engine Corp. v. Colo. Dept. of Rev., 155 P.3d 640 (Colo. App. 2007).