Pub. 12 2013-2014 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 29 new jersey auto retailer W W W . N J C A R . O R G • The franchisee is entitled to the parts markup even if the manufacturer supplies the parts for warranty repairs at no charge. The Right to Payment Within 30 Days The manufacturer must reimburse for all warranty repairs within 30 days of approval of the repair. Limitation on Rejection of Claims The manufacturer must reimburse for all repairs done in good faith and in accordance with generally accepted stan- dards. The inability to correct a defect, or even a return of the vehicle to the manufacturer under the Lemon Law, is not grounds for withholding payment. The manufac- turer may only reject claims for fraud or failure to meet “reasonable” documentation or substantiation require- ments. The manufacturer’s substantiation requirements must be in writing. Prompt Payment of All Incentives The 2011 amendments to the Franchise Practices Act cre- ated a new provision which mandates that manufacturers pay all “bonus, sales, performance or other programs within 30 days after receipt of a claim from the motor vehicle franchisee.” In addition, this new provision re- quires written notice stating the grounds for disapproval of any incentive program claim and, as with warranty claims, limits the grounds for disapproval to fraud or failure to comply with reasonable, written requirements for documenting such claims. Audit Limits The 2011 amendments to the Act added even more pro- tections for franchisees. With regard to warranty repair payment rights, a franchisor may not audit a warranty claim more than 12 months after payment, unless there are reasonable grounds to believe the claim was fraudulent. With regard to incentive and other program payments, this “statute of limitations” on audits is even stricter, with no exception for suspected fraud. For incentive and program payments, the statute states simply that “A motor vehicle franchisor shall not audit a claim after the expiration of 12 months following payment of the claim.” Patrick F. Cox, Esq. is the Director of Legal and Regulatory Affairs at NJ CAR. He can be reached at 609.883.5056, x350 or a pcox@njcar.org. WARRANTY  continued from page 27