Chicago and Illinois Automobile Dealer Lawyers

A Same-Line Store Around the Corner? Illinois Dealers Have a Real Protest Right

March 24, 2026 | Peter S. Lubin and James V. DiTommaso

When a manufacturer announces a new point or a relocation, the first reaction inside most dealerships is frustration. The second is resignation. The factory says the market can support another store. The decision must already be made. There is no point in fighting it. That reaction is exactly what gets dealers hurt. In Illinois, a proposed additional same-line franchise or a relocation into the relevant market area of an existing dealer is not supposed to be a fait accompli.

The Illinois Motor Vehicle Franchise Act gives dealers a real protest process, and that process has teeth. If a manufacturer wants to grant an additional franchise in the relevant market area of an existing same-line dealer, or relocate an existing dealership within or into that market area, the manufacturer must send notice by certified mail at least 60 days before taking the proposed action. The notice is supposed to state the specific grounds for the proposal, and the dealer has only 30 days from receipt to file a written protest. Those deadlines are unforgiving. A strong case can become a lost case if the store treats the notice like ordinary correspondence.

If the protest is timely filed, the matter does not remain in the manufacturer’s hands. The Act requires a hearing schedule, and the manufacturer bears the burden of proving good cause to allow the additional franchise or relocation. Just as importantly, the manufacturer may not grant the additional franchise or complete the relocation before the hearing process is over and the manufacturer has prevailed. That point gets lost in the panic. A timely protest is not just symbolic. It can stop the move from becoming operational while the dispute is still being decided.

That shifts the leverage in a meaningful way. The dealer does not have to prove that the sky will fall if another point opens. The manufacturer has to prove that the proposed move is justified under the statutory standards. Illinois law directs the Board or arbitrators to consider a detailed list of factors, not just the manufacturer’s business preference. Those factors include whether economic and marketing conditions warrant the move, the retail sales and service business already being transacted in the market over the prior five years compared with the business available, the investments already made by existing dealers, the permanency of those investments, whether the public welfare would be helped or harmed, whether existing dealers are already providing adequate competition and convenient consumer care, whether those dealers have adequate facilities, parts, and qualified personnel, and the effect the new point or relocation would have on existing same-line dealers.

One statutory phrase is especially important. Illinois says good cause is not shown solely by a desire for further market penetration. That matters because “we want more penetration” is often the manufacturer’s real theme, even when the written notice uses more polished language. If existing dealers are serving customers well, carrying the capital burden, staffing the service department, and covering the market responsibly, a raw desire to sell more metal by putting another roof nearby is not supposed to end the analysis.

In practice, these protests are won or lost with facts. Dealers should immediately assemble a package that tells the market story better than the factory’s notice does. That usually means five years of sales and service history, facility investment records, staffing levels, parts and service capacity, appointment lead times, customer draw patterns, and evidence of the store’s permanency in the market. It may also mean showing the risks the factory’s plan creates: weakened fixed-operations absorption, unnecessary duplication of facilities, reduced investment incentives, and harm to service convenience if the move destabilizes the stores already serving the area. Continue reading ›

Chargeback Letter from the Factory? Illinois Dealers Should Not Treat It Like the Final Word.

March 24, 2026 | Peter S. Lubin and James V. DiTommaso

The debit memo usually arrives after the money has already been booked. A warranty claim that looked closed suddenly comes back to life. An incentive payment from months ago is now being “reviewed.” The factory’s spreadsheet says the store owes money, so accounting assumes the store owes money. That reaction is understandable. It is also often too quick. In Illinois, warranty and incentive chargebacks are governed by statute, and the process matters every bit as much as the manufacturer’s conclusion.

Dealers should start with the basic timing rules. Under the Illinois Motor Vehicle Franchise Act, a warranty claim submitted by a franchised dealer must be approved or disapproved within 30 days after submission in the manner and on the forms the manufacturer reasonably prescribes. Approved claims must be paid within 30 days after approval. If the manufacturer does not specifically disapprove the claim in writing or by electronic transmission within that 30-day period, the claim is deemed approved and payment must follow within 30 days. That is a powerful starting point, because it means the manufacturer is not supposed to sit on claims indefinitely and then rewrite history after the fact.

The disapproval rules matter too. When a claim is disapproved, the dealer is entitled to written notice stating the specific grounds for the disapproval. The dealer then has 30 days to correct and resubmit the claim. In practice, that means a vague after-the-fact accusation is not enough. Dealers should be asking basic questions immediately. When was the claim submitted? When was it disapproved? What exactly was the stated reason? Was the objection timely? Was the store given a real chance to cure? Those are not technicalities. They are often the difference between a legitimate adjustment and an overreach.

Manufacturers do have audit rights, but those rights are not open-ended. The statute allows the manufacturer to require reasonable documentation and to audit warranty claims within one year from the date the claim was paid or the credit was issued. For other incentive and reimbursement programs, the audit and chargeback window is also one year after the claim was paid or the credit was issued. That should change how dealers evaluate old debits. If the factory is reaching back beyond the statutory window, the conversation is already different.

The Illinois statute is also more protective than many dealers realize when it comes to warranty repair orders themselves. The Act states that no debit reduction or chargeback of any item on a warranty repair order may be made absent a finding of fraud or illegal actions by the dealer. At the same time, the manufacturer retains the ability to audit claims and to charge back false or unsubstantiated claims within the statutory period. The practical takeaway is not that every audit disappears. The takeaway is that a chargeback should not be treated as self-proving. Dealers should separate truly false claims from documentation disputes, coding disagreements, or hindsight second-guessing about repair-order detail.

That distinction becomes even more important because manufacturers sometimes use audits as a backdoor cost-control device. Illinois law addresses that problem directly in several ways. It requires compensation for diagnostic work and warranty labor at no less than the dealer’s retail customer rate for like work. It requires payment for time spent communicating with a technical assistance center, engineering group, or other outside manufacturer source when that communication is necessary to perform a warranty repair. It bars manufacturers from imposing cost-recovery fees or surcharges on franchised dealers for payments made under the warranty-compensation section. In other words, the statute does not just talk about what the manufacturer may recover. It also talks about what the dealer must be paid. Continue reading ›

Factory Image Program or Seven-Figure Renovation Demand? Illinois Dealers Should Not Assume They Have to Say Yes

March 24, 2026 | Peter S. Lubin and James V. DiTommaso

A facility demand from the factory usually arrives dressed up as a business plan. The renderings look polished. The timeline looks urgent. The number looks painful. Sometimes the message is explicit. Rebuild the showroom. Replace the signs. Rework the service drive. Carve out exclusive space. Use our vendor. Do it now or your renewal will become a problem. Dealers hear that kind of message and often conclude the fight is over before it starts.

That is a mistake. Illinois law does not turn every manufacturer preference into a legal obligation. Some facility demands are legitimate. Some are commercially sensible. But some are leverage plays designed to extract capital on the theory that the dealer is too busy running the store to challenge the premise. In our experience, the dealers who pause, pull the documents, and evaluate the statutory timeline usually negotiate from a much stronger position than the dealers who assume the factory has already won.

The first question is whether the demand is really a condition of renewal or continuation of the franchise. Under the Illinois Motor Vehicle Franchise Act, if a manufacturer intends to change substantially or modify a dealer’s sales and service obligations or capital requirements as a condition to extending or renewing the existing franchise, the manufacturer has to follow a process. That process matters. It is not just paperwork. It is where leverage starts.

The statute requires the manufacturer to send a certified notice at least 60 days before the franchise expires. The notice is supposed to state the specific grounds for the proposed action, and the dealer has only 30 days from receipt to file a protest. If the dealer timely protests, the manufacturer carries the burden of proving good cause, and the manufacturer cannot force the new obligations into place before the hearing process is finished. Depending on the parties’ agreement, the dispute may proceed through arbitration or through the Motor Vehicle Review Board. Either way, the calendar matters. A “friendly” facility conversation can harden into a deadline-driven legal dispute very quickly.

That is why dealers should be careful about informal pressure. The factory representative may present the demand as collaborative. The email may say the program is “expected” rather than “required.” The dealer may be told there is still time to “work it out.” Then the renewal papers show up with a new capital requirement baked in. At that point, the store is no longer negotiating about branding. It is defending the franchise itself. The legal issue is not whether the manufacturer would prefer a shinier building. The issue is whether the manufacturer can prove a lawful basis to impose the obligation on the schedule it has chosen. Continue reading ›