Bill
SB 2347
SB 2347 expands oversight to distributors/factory branches, standardizes warranty/recall reimbursements, succession rules, dealership relations, and promotional practices.
Title: AN ACT RELATING TO MOTOR AND OTHER VEHICLES -- REGULATION OF BUSINESS PRACTICES AMONG MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND DEALERS
Jurisdiction: Rhode Island
Session: 2026
Introduced: January 30, 2026
Referred to: Senate Commerce
Sponsors: Britto, McKenney, DiPalma, Burke, Bissaillon, Felag (co-sponsors)
Effective Date: Upon passage
Purpose and main intent
- The bill expands and harmonizes regulatory protections previously applied to motor vehicle manufacturers and dealers to also cover distributors and factory branches.
- It updates and standardizes warranty reimbursement, recall obligations, dealership succession, dealership location approvals, delivery and risk-of-loss rules, and promotional/transactional practices.
- Overall aim: strengthen oversight of the business relationships and financial interactions between manufacturers/distributors/factory branches and franchised motor vehicle dealers, ensuring fair compensation, more transparent processes, and clearer procedures for disputes and recalls.
Key provisions and changes
1) Dealership Succession (31-5.1-4.1)
- Allow a designated family member to succeed ownership of a new motor vehicle dealership via will or other written instrument.
- Family succession allowed if:
- Notice of intent to succeed is given within 120 days of death/incapacity.
- Designated successor agrees to be bound by the franchise terms.
- Successor meets current manufacturer criteria for dealer-operators.
- Manufacturers may request and review personal/financial data to determine suitability.
- If good cause exists, manufacturers can refuse succession but must follow notice and process timelines.
- Written designation in conflict with this section governs.
2) Establishing/Relocating Dealerships (31-5.1-4.2)
- Before adding a new dealership, relocating, or adding a location within a market area, manufacturers must notify Finance/Department and affected dealers in writing (certified mail).
- A protest window of 30 days to file with the department; hearings and “good cause” determinations follow.
- Department will assess factors such as market viability, consumer care, population/registration trends, and whether adding a dealership is injurious to public welfare.
- Burden of proof rests with the manufacturer/distributor/factory branch.
3) Delivery Obligations (31-5.1-5)
- Manufacturers must disclose delivery and preparation obligations and compensation schedules to the department.
- These schedules define dealer responsibilities and frame product liability boundaries between dealer and manufacturer.
4) Warranty and Reimbursement (31-5.1-6; 31-5.1-6.1)
- Dealers must be fairly compensated for warranty work, including diagnostic time.
- Dealers must be paid within specified timeframes (claims approved/disapproved within 30 days; payment within 30 days of approval).
- A method to determine reasonable dealer labor and parts rates is outlined, using:
- Dealer-submitted non-warranty repair data or time-based calculations to establish a fair dealer parts rate (with limitations on what can be included/excluded).
- A process for rebuttals by manufacturers and potential department hearings if disputes arise.
- Provisions for recall-related work:
- Dealers must be compensated for recall labor and parts at the dealer retail rate.
- If parts/remedies aren’t available within specified timeframes, dealers receive additional compensation (1.5% of vehicle value per month for affected used vehicles under stop-sale/Do-Not-Drive orders).
- Limits on total compensation relative to the stop-sale vehicle’s value.
- Prohibits double-compensation: remedies under this section are exclusive and cannot be combined with other state recall remedies.
- Provisions for chargebacks:
- Chargebacks allowed only for proven fraud or unsubstantiated claims, with timelines for dispute resolution and resubmission.
- Dealers have time to resubmit denied claims due to incidental errors.
5) Obligations During Recalls (31-5.1-6.1)
- Expanded recall obligations for recall labor and parts, including payment timing and the option to participate in a national recall program if it meets or exceeds state provisions.
6) Agreements (31-5.1-8)
- Applies to all written or oral agreements between manufacturers/distributors/factory branches and dealers, covering a wide range of contracts and promises.
7) Sales to the State (31-5.1-11)
- Prohibits offering discounts or inducements to dealers in state or political subdivisions unless the same offers are made to all dealers in the market area with simultaneous notification.
8) Transportation Damages (31-5.1-18)
- Allocation of liability for vehicle damages during transport:
- Dealer bears liability after acceptance from carrier; manufacturer/distributor bears liability before delivery to a carrier.
- If dealer selects the transport method, risk of loss passes to the dealer upon delivery to the carrier; otherwise it remains with the manufacturer until dealer acceptance.
- A six percent damage threshold (measured by retail repair costs) triggers disclosure requirements and potential dealer option to reject if exceedances occur.
- Certain items (glazing, tires, etc.) are excluded from the six percent rule.
9) Risk of Loss (31-5.1-19)
- Aligns risk of loss with transportation method and acceptance status, clarifying when risk transfers between dealer and manufacturer.
10) Promotional Activities (31-5.1-21)
- Regulates dealer compensation for incentive or reimbursement programs, including timing for claim approval, payment, and chargebacks for unsubstantiated claims within specified windows.
11) General Note on Process and Rights
- Provisions establish that protests are to be heard by the Rhode Island Department of Revenue and give parties rights to appeal decisions in court.
- Burden of proof in hearings lies with the party seeking to establish “good cause” or fair adjustments.
Impact and who is affected
Procedural and timeline aspects
Overall assessment
SB 2347 seeks to modernize and harmonize the regulatory framework governing the conduct of motor vehicle manufacturers, distributors, factory branches, and franchised dealers in Rhode Island. It introduces clearer succession rules, expansion of regulatory oversight to distributors and factory branches, codifies warranty and recall reimbursement standards, and tightens rules around dealership development, transportation risk, and promotional practices. The act would take effect upon passage.
Compiled from official sources — confirm details with the bill’s official record.
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