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House Amendment 5307

Amendment Text

PAG LIN
  1  1    Amend the amendment, H-5260, to House File 2235 as
  1  2 follows:
  1  3    #1.  By striking page 5, line 35, through page 6,
  1  4 line 47, and inserting the following:
  1  5    "Sec.    .  Section 523H.7, Code Supplement 1995,
  1  6 is amended to read as follows:
  1  7    523H.7  TERMINATION.
  1  8    1.  Except as otherwise provided by this chapter, a
  1  9 franchisor shall not terminate a franchise prior to
  1 10 the expiration of its term except for good cause.  For
  1 11 purposes of this section, "good cause" is cause based
  1 12 upon a legitimate business reason.  "Good cause"
  1 13 includes the failure of the franchisee to comply with
  1 14 any material lawful requirement of the franchise
  1 15 agreement, provided that the termination by the
  1 16 franchisor is not arbitrary or capricious when
  1 17 compared to the actions of the franchisor in other
  1 18 similar circumstances.  The burden of proof of showing
  1 19 that action of the franchisor is arbitrary or
  1 20 capricious shall rest with the franchisee.
  1 21    2.  Prior to termination of a franchise for good
  1 22 cause, a franchisor shall provide a franchisee with
  1 23 written notice stating the basis for the proposed
  1 24 termination.  After service of written notice, the
  1 25 franchisee shall have a reasonable period of time to
  1 26 cure the default, which in no event shall be less than
  1 27 thirty days or more than ninety days.  In the event of
  1 28 nonpayment of moneys due under the franchise
  1 29 agreement, the period to cure need not exceed thirty
  1 30 days.
  1 31    3.  Notwithstanding subsection 2, a franchisor may
  1 32 terminate a franchisee upon written notice and without
  1 33 an opportunity to cure if any of the following apply:
  1 34    a.  The franchisee or the business to which the
  1 35 franchise relates is declared bankrupt or judicially
  1 36 determined to be insolvent.
  1 37    b.  All or a substantial part of the assets of the
  1 38 franchise or the business to which the franchisee
  1 39 relates are assigned to or for the benefit of any
  1 40 creditor which is subject to chapter 681.  An
  1 41 assignment for the benefit of any creditor pursuant to
  1 42 this paragraph does not include the granting of a
  1 43 security interest in the normal course of business.
  1 44    c. b.  The franchisee voluntarily abandons the
  1 45 franchise by failing to operate the business for five
  1 46 consecutive business days during which the franchisee
  1 47 is required to operate the business under the terms of
  1 48 the franchise, or any shorter period after which it is
  1 49 not unreasonable under the facts and circumstances for
  1 50 the franchisor to conclude that the franchisee does
  2  1 not intend to continue to operate the franchise,
  2  2 unless the failure to operate is due to circumstances
  2  3 beyond the control of the franchisee.
  2  4    d. c.  The franchisor and franchisee agree in
  2  5 writing to terminate the franchise.
  2  6    e. d.  The franchisee knowingly makes any material
  2  7 misrepresentations or knowingly omits to state any
  2  8 material facts relating to the acquisition or
  2  9 ownership or operation of the franchise business.
  2 10    f.  After three material breaches of a franchise
  2 11 agreement occurring within a twelve-month period, for
  2 12 which the franchisee has been given notice and an
  2 13 opportunity to cure, the franchisor may terminate upon
  2 14 any subsequent material breach within the twelve-month
  2 15 period without providing an opportunity to cure,
  2 16 provided that the action is not arbitrary and
  2 17 capricious.
  2 18    e.  The franchisee repeatedly fails to comply with
  2 19 the same material provision of a franchise agreement,
  2 20 when the enforcement of the material provision by the
  2 21 franchisor is not arbitrary or capricious when
  2 22 compared to the actions of the franchisor in other
  2 23 similar circumstances.
  2 24    g. f.  The franchised business or business premises
  2 25 of the franchisee are lawfully seized, taken over, or
  2 26 foreclosed by a government authority or official.
  2 27    h. g.  The franchisee is convicted of a felony or
  2 28 any other criminal misconduct which materially and
  2 29 adversely affects the operation, maintenance, or
  2 30 goodwill of the franchise in the relevant market.
  2 31    i. h.  The franchisee operates the franchised
  2 32 business in a manner that imminently endangers the
  2 33 public health and safety."
  2 34    #2.  By renumbering as necessary.  
  2 35 
  2 36 
  2 37                              
  2 38 WEIGEL of Chickasaw
  2 39 HF 2235.220 76
  2 40 mj/jj
     

Text: H05306                            Text: H05308
Text: H05300 - H05399                   Text: H Index
Bills and Amendments: General Index     Bill History: General Index

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