                                 CODE OF VIRGINIA

MANUFACTURER OR DISTRIBUTOR RIGHT OF FIRST REFUSAL (§ 46.2-1569.1)

A. Notwithstanding the terms of any franchise agreement, in the event of a
proposed sale or transfer of a dealership, the manufacturer or distributor shall
be permitted to exercise a right of first refusal to acquire the new vehicle
dealer&#8217;s assets or ownership, if such sale or transfer is conditioned upon
the manufacturer&#8217;s or dealer&#8217;s entering into a dealer agreement with
the proposed new owner or transferee, only if all the following requirements are
met:

   1. To exercise its right of first refusal, the manufacturer or distributor
   must notify the dealer in writing within 45 days of its receipt of the notice
   for the proposed sale or transfer submitted as required by subdivision 3 of
   &#xA7; 46.2-1569;

   2. The exercise of the right of first refusal will result in the
   dealer&#8217;s and dealer&#8217;s owner&#8217;s receiving the same or greater
   consideration as they have contracted to receive in connection with the
   proposed change of ownership or transfer; and

   3. The manufacturer or distributor agrees to pay the reasonable expenses,
   including attorney&#8217;s fees which do not exceed the usual, customary, and
   reasonable fees charged for similar work done for other clients, incurred by
   the proposed new owner and transferee prior to the manufacturer&#8217;s or
   distributor&#8217;s exercise of its right of first refusal in negotiating and
   implementing the contract for the proposed sale or transfer of the dealership
   or dealership assets. Notwithstanding the foregoing, no payment of such
   expenses and attorney&#8217;s fees shall be required if the dealer has not
   submitted or caused to be submitted an accounting of those expenses within 30
   days of the dealer&#8217;s receipt of the manufacturer&#8217;s or
   distributor&#8217;s written request for such an accounting. Such accounting
   may be requested by a manufacturer or distributor before exercising its right
   of first refusal.

B. A manufacturer or distributor shall not exercise or enforce a right of first
refusal if (i) the proposed sale or transfer is to a dealer licensed in the
United States as a dealer holding a franchise from any manufacturer or
distributor licensed as a manufacturer or distributor in the Commonwealth unless
the manufacturer or distributor has a formal written program to increase the
number of minority dealers and a minority dealer will obtain at least 51 percent
ownership and control of the dealership&#8217;s assets after the exercise of the
right of first refusal consistent with subdivision 2 of &#xA7; 46.2-1572 or (ii)
the proposed sale or transfer of the dealership&#8217;s assets involves the
transfer or sale to a member or members of the family of one or more dealer
owners, or to a qualified manager or a partnership, limited liability company,
corporation, or other entity controlled by such persons.

C. The provisions of clause (i) of subsection B shall not apply to any
manufacturer or distributor, together with any of its parents, subsidiaries or
affiliates that as of January 1, 2019, (i) produced or distributed at least
1,000 motor vehicles in the immediately preceding 12 months, at least 51 percent
of which had a gross vehicle weight rating of at least 16,000 pounds and (ii)
was on January 1, 2019 a party, including that party&#8217;s parents,
subsidiaries and affiliates, to federal litigation arising from rights and
obligations created by &#xA7; 46.2-1569.1.

HISTORY: 1994, c. 809; 2003, c. 298; 2019, cc. 738, 739; 2025, cc. 546, 558.