A little-known provision in Oklahoma's new franchise law gives dealers critical protection when a manufacturer ends the relationship.
Most Oklahoma auto service and dealership owners don't realize that a new state law—effective November 1, 2026—fundamentally changes what happens to their inventory if a manufacturer terminates their franchise agreement.
The provision is buried in Senate Bill 604, a broad franchise law that rewrites Oklahoma's motor vehicle dealer statutes. But one specific section has direct, material consequences for any dealer holding unsold new vehicles when a manufacturer decides to end the business relationship.
Under Section 2 of SB604 (amending Oklahoma Statute §565.2, Subsection E, Paragraph 1), when a manufacturer successfully terminates a franchise agreement, the manufacturer must repurchase the dealer's unsold new vehicle inventory. The buyback must happen within 90 days and must pay no less than the dealer's net acquisition price—the actual cost the dealer paid for those vehicles.
The law goes further. It's not just vehicles. The manufacturer must also repurchase parts inventory, equipment, furnishings, and special tools at fair and reasonable compensation. The entire 90-day clock starts from the date the franchise terminates.
This matters because new vehicle inventory is typically a dealer's single largest capital asset. A franchise termination without this protection could leave a dealer holding tens or hundreds of thousands of dollars in vehicles they can no longer sell through their original manufacturer relationship—with no clear path to recover that investment.
This protection applies to any Oklahoma auto dealer or auto service business that holds a franchise agreement with a vehicle manufacturer and carries new vehicle inventory. It covers both full-line dealerships and smaller service operations that may stock new vehicles as part of their business model.
The law protects the dealer when the manufacturer is the party terminating the agreement. It establishes a clear, statutory obligation rather than leaving buyback terms to negotiation during a dispute—when the dealer typically has the least leverage.
The provision becomes effective November 1, 2026. Any franchise termination that occurs on or after that date is subject to this 90-day repurchase requirement. Dealers should review their current franchise agreements now to understand how this new law may alter their existing terms.
The 90-day window is strict. Manufacturers cannot indefinitely delay payment or dispute the valuation without statutory consequence. This creates a defined timeline for cash recovery—critical for dealers managing working capital.
Franchise relationships in the auto industry can end for many reasons: manufacturer consolidation, performance disputes, or strategic shifts. Without this law, dealers faced significant risk of stranded inventory with no legal obligation for the manufacturer to buy it back. SB604 shifts that risk back to the manufacturer, which is the party with the power to terminate.
Dealers should consult with legal counsel to ensure their franchise agreements are reviewed in light of this new requirement and to understand how it interacts with any existing buyback or termination clauses.
This summary is based on the text of Oklahoma Senate Bill 604, Section 2 (amending §565.2, Subsection E, Paragraph 1), effective November 1, 2026. For a detailed, business-specific analysis of how this provision affects your operation, consult a franchise attorney licensed in Oklahoma.