Bill
Bill > HF2197
IA HF2197
IA HF2197A bill for an act relating to franchisee compensation and time allowances for motor vehicle warranty services, and including applicability provisions.
summary
Introduced
01/29/2026
01/29/2026
In Committee
01/29/2026
01/29/2026
Crossed Over
Passed
Dead
Introduced Session
91st General Assembly
Bill Summary
Under current law, both a franchiser (a manufacturer or distributor of motor vehicles) and franchisee (a person who receives motor vehicles from the franchiser under a contract and who offers and sells such motor vehicles to the general public) are required to fulfill the terms of any express or implied warranty concerning the sale of a motor vehicle to the public. A franchiser must compensate a franchisee for the warranty services the franchiser requires the franchisee to provide. The franchiser is required to provide to the franchisee a schedule of compensation that specifies reasonable compensation the franchiser will pay to the franchisee for such warranty services, including for parts, labor, and diagnostics. The schedule of compensation must provide for the franchisee’s average percentage markup on parts, as calculated by the franchisee, and the franchisee’s retail labor rate, both of which must be approved by the franchiser. The franchiser must pay a franchisee for warranty parts and labor at least the franchisee’s retail rates for like parts and services, if those retail rates are reasonable. The franchiser is required to provide a list of reasonable and adequate time allowances for the performance of warranty services. This bill strikes the requirement for a franchiser to provide a schedule of compensation, and the related schedule provisions, and instead requires a franchiser to pay a franchisee for warranty services, including for parts, labor, and diagnostics, an amount not less than the rates and labor times charged by the franchisee for like parts and services to retail customers, provided the rates and labor times are reasonable. A franchisee is required to provide to the franchiser an itemized list of rates and labor times for warranty services performed by the franchisee. The bill also strikes the requirement for a franchiser to provide a list of time allowances for the performance of warranty services, and instead requires a franchisee to perform warranty services in a reasonable amount of time. The bill applies to franchises under Code chapter 322A entered into or renewed on or after July 1, 2026.
AI Summary
This bill modifies how motor vehicle manufacturers, referred to as franchisers, compensate dealerships, known as franchisees, for warranty work. Instead of the franchiser providing a set schedule of approved rates for parts, labor, and diagnostic services, the bill requires the franchiser to pay the franchisee an amount no less than what the franchisee normally charges their regular customers for similar services, as long as those rates are reasonable. The franchisee will need to provide the franchiser with a list of their standard rates and the time they typically take to perform these services. Additionally, the bill removes the franchiser's obligation to provide a list of recommended time allowances for warranty repairs, and instead mandates that franchisees complete warranty work within a reasonable timeframe. These changes will apply to new or renewed franchise agreements starting July 1, 2026.
Committee Categories
Transportation and Infrastructure
Sponsors (1)
Last Action
Introduced, referred to Transportation. H.J. 173. (on 01/29/2026)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=HF2197 |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/HF2197.html |
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