3065.1
. (a) All claims made by a franchisee for payment under the
terms of a franchisor incentive program shall be either approved or
disapproved within 30 days after receipt by the franchisor. When any
claim is disapproved, the franchisee who submits it shall be notified
in writing of its disapproval within the required period, and each
notice shall state the specific grounds upon which the disapproval is
based. Any claim not specifically disapproved in writing within 30
days from receipt shall be deemed approved on the 30th day.
(b) Franchisee claims for incentive program compensation shall not
be disapproved unless the claim is false or fraudulent, the claim is
ineligible under the terms of the incentive program as previously
communicated to the franchisee, or for material noncompliance with
reasonable and nondiscriminatory documentation and administrative
claims submission requirements.
(c) The franchisor shall provide for a reasonable appeal process
allowing the franchisee at least 30 days after receipt of the written
disapproval notice to respond to any disapproval with additional
supporting documentation or information rebutting the disapproval. If
disapproval is based upon noncompliance with documentation or
administrative claims submission requirements, the franchisor shall
allow the franchisee at least 30 days from the date of receipt of the
written disapproval notice to cure any material noncompliance. If
the disapproval is rebutted, and material noncompliance is cured
before the applicable deadline, the franchisor shall approve the
claim.
(d) If the franchisee provides additional supporting documentation
or information purporting to rebut the disapproval, attempts to cure
noncompliance relating to the claim, or otherwise appeals denial of
the claim, and the franchisor continues to deny the claim, the
franchisor shall provide the franchisee with a written notification
of the final denial within 30 days of completion of the appeal
process, which shall conspicuously state "Final Denial" on the first
page.
(e) Following the disapproval of a claim, a franchisee shall have
six months from receipt of the written notice described in either
subdivision (a) or (d), whichever is later, to file a protest with
the board for determination of whether the franchisor complied with
subdivisions (a), (b), (c), and (d). In any hearing pursuant to this
subdivision or subdivision (a), (b), (c), or (d), the franchisor
shall have the burden of proof.
(f) All claims made by franchisees under this section shall be
paid within 30 days following approval. Failure to approve or pay
within the above specified time limits, in individual instances for
reasons beyond the reasonable control of the franchisor, do not
constitute a violation of this article.
(g) (1) Audits of franchisee incentive records may be conducted by
the franchisor on a reasonable basis, and for a period of nine
months after a claim is paid or credit issued. A franchisor shall not
select a franchisee for an audit, or perform an audit, in a
punitive, retaliatory, or unfairly discriminatory manner. A
franchisor may conduct no more than one random audit of a franchisee
in a nine-month period. The franchisor's notification to the
franchisee of any additional audit within a nine-month period shall
be accompanied by written disclosure of the basis for that additional
audit.
(2) Previously approved claims shall not be disapproved and
charged back unless the claim is false or fraudulent, the claim is
ineligible under the terms of the incentive program as previously
communicated to the franchisee, or for material noncompliance with
reasonable and nondiscriminatory documentation and administrative
claims submission requirements. A franchisor shall not disapprove a
claim or chargeback a claim based upon an extrapolation from a sample
of claims, unless the sample of claims is selected randomly and the
extrapolation is performed in a reasonable and statistically valid
manner.
(3) If the franchisor disapproves of a previously approved claim
following an audit, the franchisor shall provide to the franchisee,
within 30 days after the audit, a written disapproval notice stating
the specific grounds upon which the claim is disapproved. The
franchisor shall provide a reasonable appeal process allowing the
franchisee a reasonable period of not less than 30 days after receipt
of the written disapproval notice to respond to any disapproval with
additional supporting documentation or information rebutting the
disapproval and to cure any material noncompliance, with the period
to be commensurate with the volume of claims under consideration. If
the franchisee rebuts any disapproval and cures any material
noncompliance relating to a claim before the applicable deadline, the
franchisor shall not chargeback the franchisee for that claim.
(4) If the franchisee provides additional supporting documentation
or information purporting to rebut the disapproval, attempts to cure
noncompliance relating to the claim, or otherwise appeals denial of
the claim, and the franchisor continues to deny the claim, the
franchisor shall provide the franchisee with a written notification
of the final denial within 30 days of completion of the appeal
process, which shall conspicuously state "Final Denial" on the first
page.
(5) The franchisor shall not chargeback the franchisee until 45
days after the franchisee receives the written notice described in
paragraph (3) or (4), whichever is later. If the franchisee cures any
material noncompliance relating to a claim, the franchisor shall not
chargeback the dealer for that claim. Any chargeback to a franchisee
for incentive program compensation shall be made within 90 days
after the franchisee receives that written notice. If the board
sustains the chargeback or the protest is dismissed, the franchisor
shall have 90 days following issuance of the final order or the
dismissal to make the chargeback, unless otherwise provided in a
settlement agreement.
(6) Within six months after either receipt of the written notice
described in paragraph (3) or (4), a franchisee may file a protest
with the board for determination of whether the franchisor complied
with this subdivision. If the franchisee files a protest pursuant to
this subdivision prior to the franchisor's chargeback for denied
claims, the franchisor shall not offset or otherwise undertake to
collect the chargeback until the board issues a final order on the
protest. In any protest pursuant to this subdivision, the franchisor
shall have the burden of proof.
(h) If a false claim was submitted by a franchisee with the intent
to defraud the franchisor, a longer period for audit and any
resulting chargeback may be permitted if the franchisor obtains an
order from the board.