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Text: S03372                            Text: S03374
Text: S03300 - S03399                   Text: S Index
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Senate Amendment 3373

Amendment Text

PAG LIN
  1  1    Amend House File 126, as amended, passed, and
  1  2 reprinted by the House, as follows:
  1  3    #1.  By striking page 1, line 35, through page 2,
  1  4 line 10, and inserting the following:
  1  5    "523H.6  FRANCHISE MARKET AREA.
  1  6    1.  This section applies to a franchise which is
  1  7 not a food service franchise or food service
  1  8 establishment franchise subject to section 523H.6A.
  1  9    2.  An action by a franchisor or its licensee which
  1 10 diverts trade away from an existing franchisee and
  1 11 which materially injures the franchisee's business is
  1 12 a violation of the duty of good faith and results in a
  1 13 cause of action accruing to the franchisee for
  1 14 damages, injunctive relief, or other appropriate
  1 15 remedy as determined by the court.  In any action
  1 16 brought pursuant to this section, proof of a
  1 17 correlation between the action of the franchisor or
  1 18 its licensee and the diversion of trade establishes a
  1 19 prima facie case of a violation of this section.
  1 20    3.  This section shall apply notwithstanding the
  1 21 terms, provisions, or conditions of an agreement or
  1 22 franchise.
  1 23    Sec.    .  NEW SECTION.  523H.6A  FOOD SERVICE
  1 24 FRANCHISE OR FOOD SERVICE ESTABLISHMENT FRANCHISE
  1 25 MARKET AREA.
  1 26    1.  a.  For purposes of a food service franchise or
  1 27 food service establishment franchise, a rebuttable
  1 28 presumption arises that a breach of the duty of good
  1 29 faith has occurred as a result of the diversion of
  1 30 trade if a franchisor establishes a new company-owned
  1 31 outlet or store or a new franchise outlet or store
  1 32 within a two-mile radius, using a straight line
  1 33 measurement, from the center of an already existing
  1 34 franchise, or within an area with a radius, using a
  1 35 straight line measurement, from the center of an
  1 36 already existing franchise, which contains a
  1 37 population of twenty thousand or greater.
  1 38    b.  With respect to locations within the relevant
  1 39 consumer market area of an existing franchise
  1 40 operation which are located outside of the geographic
  1 41 area defined in paragraph "a", a rebuttable
  1 42 presumption arises that a breach of the duty of good
  1 43 faith has not occurred as a result of the diversion of
  1 44 trade.
  1 45    2.  A franchisor shall establish and make available
  1 46 a written policy outlining reasonable objective
  1 47 criteria to be used by the franchisor to determine
  1 48 whether an existing franchisee is eligible to
  1 49 participate in the establishment of an additional
  1 50 outlet or location which is proposed to be located
  2  1 within the relevant consumer market area of the
  2  2 existing franchise, but which is outside of the
  2  3 geographic area as defined in subsection 1, paragraph
  2  4 "a", or which is proposed to be located within the
  2  5 same community in which an existing franchise is
  2  6 located and within the geographic area as defined in
  2  7 subsection 1, paragraph "a".  The franchisor shall
  2  8 provide a copy of this policy to all existing
  2  9 franchisees or potential franchisees upon request.  A
  2 10 franchisor, upon the request of a franchisee, shall
  2 11 notify the franchisee as to whether the franchisee may
  2 12 acquire additional outlets or locations of the
  2 13 franchisor as identified in this subsection.  A
  2 14 franchisor shall not adopt a policy that unreasonably
  2 15 prohibits an existing franchisee from acquiring such
  2 16 outlets or locations.
  2 17    3.  Upon the determination of a franchisor to
  2 18 establish an additional outlet or location within a
  2 19 geographic area as defined in subsection 1, paragraph
  2 20 "a", the franchisor shall give a right of first
  2 21 refusal to the nearest franchisee located within the
  2 22 geographic area.  If the franchisee declines to
  2 23 exercise the right of first refusal, the right of
  2 24 first refusal shall pass consecutively to the next
  2 25 closest franchisee located within the geographic area.
  2 26 If all such franchisees located within the geographic
  2 27 area decline to exercise the right of first refusal,
  2 28 the franchisor may proceed to establish a new
  2 29 franchise or company-owned outlet or location.
  2 30    4.  If an existing franchisee located within a
  2 31 geographic area as defined in subsection 1, paragraph
  2 32 "a", determines that the franchisee has been aggrieved
  2 33 as a result of the action of a franchisor which
  2 34 establishes a new franchise or company-owned outlet or
  2 35 location within the geographic area, the franchisee,
  2 36 upon motion to the district court, shall be granted a
  2 37 temporary injunction prohibiting the establishment of
  2 38 a new franchise or company-owned outlet or location.
  2 39 The proceeding shall be summary in nature and triable
  2 40 as an equitable action."
  2 41    #2.  By renumbering as necessary.  
  2 42 
  2 43 
  2 44                              
  2 45 COMMITTEE ON COMMERCE
  2 46 PATRICK J. DELUHERY, Chairperson
  2 47 HF 126.706 76
  2 48 mj/sc
     

Text: S03372                            Text: S03374
Text: S03300 - S03399                   Text: S Index
Bills and Amendments: General Index     Bill History: General Index

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