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House Journal: Page 2059: Friday, April 28, 1995

Page 7

 1   to judicial review pursuant to chapter 679A.
 2     2.  A franchisor shall establish and make available
 3   to its franchisees a written policy setting forth its
 4   reasonable criteria to be used by the franchisor to
 5   determine whether an existing franchisee is eligible
 6   for a franchise for an additional outlet or location.
 7     3.  a.  In establishing damages under a cause of
 8   action brought pursuant to this section, the
 9   franchisee has the burden of proving the amount of
10   lost profits attributable to the compensable sales.
11   In any action brought under this section, the damages
12   payable shall be limited to no more than three years
13   of the proven lost profits.  For purposes of this
14   subsection, "compensable sales" means the annual gross
15   sales from the existing outlet or location during the
16   twelve-month period immediately preceding the opening
17   of the new outlet or location less both of the
18   following:
19     (1)  Five percent.
20     (2)  The actual gross sales from the operation of
21   the existing outlet or location for the twelve-month
22   period immediately following the opening of the new
23   outlet or location.
24     b.  Compensable sales shall exclude any amount
25   attributable to factors other than the opening and
26   operation of the new outlet or location.
27     4.  Any cause of action brought under this section
28   must be filed within eighteen months of the opening of
29   the new outlet or location or within three months
30   after the completion of the procedure under subsection
31   1, paragraph "d", subparagraph (2), whichever is
32   later.
33     5.  Upon petition by the franchisor or the
34   franchisee, the district court may grant a permanent
35   or preliminary injunction to prevent injury or
36   threatened injury for a violation of this section or
37   to preserve the status quo pending the outcome of the
38   formal procedure under subsection 1, paragraph "d",
39   subparagraph (2).
40     Sec. 4.  Section 523H.7, Code 1995, is amended to
41   read as follows:
42     523H.7  TERMINATION.
43     1.  Except as otherwise provided by this chapter, a
44   franchisor shall not terminate a franchise prior to
45   the expiration of its term except for good cause.  For
46   purposes of this section, "good cause" is cause based
47   upon a legitimate business reason.  "Good cause"
48   includes the failure of the franchisee to comply with
49   any material lawful requirement of the franchise
50   agreement, provided that the termination by the

Iowa General Assembly

Index: House Journal (76th General Assembly: Session 1)

© 1995 Cornell College and League of Women Voters of Iowa

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